Yes, there is a bigger factor. Western economies are stronger than India's. The average pay is higher and the standard of living is higher (this also means that the cost of living is higher but that gets compensated by the fact that the conversion rates from eg USD to INR are so high that even a little money makes a huge amount of difference).

When I did Google Summer of Code in my freshman year in college I got paid $5500 for three months' work, which when converted to INR was more than my father was making in a whole year working fulltime.

Rs 1 million (ballpark figure) is considered to be a good salary for an average software engineer in India. By PPP conversion this is only equivalent to $57k, which is less than half of what some freshers make in the Bay Area or NYC.