300% Pay rise for Members of Parliament in India

Hours after the Union Cabinet on 19.08.2010 cleared a 300 per cent salary hike, from Rs. 16,000 to Rs. 50,000, for members of Parliament and doubled their perks, they appeared to be a dissatisfied lot and stalled the Lok Sabha proceedings thrice during the day, demanding more money.

Though the Cabinet, which met in Delhi under the chairmanship of Prime Minister Manmohan Singh, approved the Bill seeking a three-fold increase in the basic salary of MPs, it fell short of the Rs. 80,001 recommended by a joint parliamentary committee, which stated that an MP should get at least Re. 1 more than the top Central government bureaucrats.

Besides salary, an MP gets an allowance of Rs.1,000 for each day the Parliament is in session or for taking part in House committee meetings. This has been doubled. A member is also entitled to a constituency allowance of Rs.20,000 a month and an office expense allowance of Rs.20,000 a month. These perks have also been doubled.

The increase will be given with retrospective effect from May 2009, when the 15th Lok Sabha was constituted. However, the increase will be implemented when the Bill seeking amendment to the Salaries and Allowances of Members of Parliament Act, 1954, is brought in Parliament and passed by both the Houses.

The deadlock over MPs’ salary hike ended on 20.08.2010 after the government’s trouble-shooter Pranab Mukherjee met agitating parliamentarians who are unhappy with the three-fold increase and are demanding a 500 per cent raise. The government is likely to consider marginally increasing the hike, official sources said.

How much an MP will now get?

The following is the summary of monetary benefits MPs are entitled to as salary and other perks which were on 19.08.2010 proposed to be hiked manifold.

Each MP gets:

1. Basic salary of Rs 16,000. The salary has been hiked by 300 percent as proposed by the cabinet.
2. Daily allowance of Rs 1,000 for each day when parliament is in session or taking part in house committee meetings. This has been doubled.
3. Constituency allowance of Rs 20,000 a month. This has been doubled.
4. Office expense allowance of Rs 20,000 each month. Also doubled.
5. Conveyance allowance of Rs 1 lakh, which has gone up to Rs 4 lakh now.
6. Spouses of MPs get free train travel from their place of residence to Delhi. They also get up to eight free plane tickets from their place of residence to Delhi.

With pay hike, an MP to cost Rs 37 Lakh a year

Not satisfied with a three-fold hike in their basic salary, many MPs stalled Parliament proceedings on 19.08.2010, saying that the “low” hike was an insult to the country’s legislators. But do these MPs have a case? Times of India did some calculations to help our MPs do a reality check on how their pay packet compares with countries around the world.

In comparison with legislators from the developed world, Indian MPs may appear to be poorly paid when we compare basic salaries at normal forex rates. However, this can be misleading.

It’s well known that basic salary is only a small part of the overall compensation given to an MP. Hence we did some calculations to get a rough estimate of the overall cost of an MP to his or her country by finding out the approximate monetary values of various perks and allowances. Converting this into international dollars in terms of purchasing power parity (the same benchmark that makes India the world’s fourth largest economy), it works out that Indian MPs cost more to the country than their counterparts in Singapore, Japan and Italy — nations globally known for their highly paid politicians.

Without including accommodation, travel, medical facilities and water charges, and taking 151 Parliament session days (from June 1, 2009 to June 1, 2010) as the annual average, it works out that the new salaries and allowances (constituency allowance, office, telephone, internet, furniture, electricity, daily allowances) given to an MP is worth more than Rs 20 lakh annually.

Now, consider the accommodation provided free or at nominal rates to MPs at some of the most upscale localities in the country — places like Lodhi Estate, Aurangzeb Road, Tughlak Lane, Akbar Road and Ferozeshah Road in Lutyens Delhi — where rent for a two or three BHK flat can go up to Rs 2 lakh a month. We can safely assume that an MP living at these places gets an additional perk of Rs 1 lakh per month by way of saving rent.

To calculate the average cost of air travel of an MP, we considered Kolkata as a point of reference (some constituencies may be farther or nearer) and assumed that an MP travels by Air India booking the ticket one week in advance. By that count, the 34 single air journeys that each MP is entitled to in a year, costs Rs 5 lakh. This brings an MP’s compensation to more than Rs 37 lakh annually.

When converted to PPP dollars, each MP’s pay and perks work out to 2.2 lakh PPP dollars — higher than the salary plus perks of MPs in Singapore (2.1 lakh) Japan (1.9 lakh) and Italy (1.9 lakh). In comparison, the cost to country of an MP in Pakistan — at 46,000 PPP dollars — makes legislators in that country appear positively poor.

There’s another way of looking at the pay packets of our MPs — by comparing it with the people they claim to represent. India’s per capita GDP being $ 3,176 (PPP), it works out that after the hikes our MPs will cost the country 68 times more than what an average Indian earns annually. That makes the disparity in India between the citizen’s average income and an MP’s cost to country, among the highest in the world. Kenya is an example of an even higher disparity, with its MPs earning 180 times the average population. The ratio is 35 for the US while for most of Western Europe and Japan, the cost of an MP doesn’t exceed 10 times the country’s per capita income.

MPs may get Rs.10,000 more – 21.08.2010

The government appears to have achieved a compromise with the Opposition parties on the issue of increasing the salary and allowances of members of Parliament. The constituency allowance will be hiked by Rs. 5,000 and the secretarial allowance by Rs. 5,000, adding up to Rs. 10,000 a month.