A Comprehensive Guide to the Mechanism for Adjusting MPs' Salaries
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Synopsis
On March 25, a 24% salary increase for MPs to Rs 1.24 lakh monthly was announced, part of a structured mechanism linking salaries to inflation through the Cost Inflation Index (CII), established after the Finance Act of 2018.
Key Takeaways
- The 24% salary increase for MPs is linked to inflation.
- A structured mechanism was established by the Finance Act of 2018.
- Salary adjustments occur every five years based on the CII.
- The last revision before 2018 took place in 2010.
- During the pandemic, a 30% salary cut was implemented for MPs.
New Delhi, March 25 (NationPress) The 24 percent rise in the salaries of MPs to Rs 1,24 lakh per month, revealed on Monday, is part of a well-defined mechanism established following the amendment of the Salaries, Allowances, and Pension of Members of Parliament Act, 1954, by the Finance Act of 2018. This mechanism links the salaries of MPs to inflation using the Cost Inflation Index (CII), as stated by a senior official.
Before this legislative amendment, salary adjustments were made on an ad hoc basis, necessitating parliamentary approval each time. The primary goal of the amendment was to remove political influence from the process and create a systematic approach to salary adjustments, according to the official.
In 2016, Prime Minister Narendra Modi expressed that MPs should not determine their remuneration and suggested that such decisions should be made by a body akin to the Pay Commission or be tied to increases for certain posts and ranks over time.
This strong perspective from the Prime Minister led to a transformation in the salary revision mechanism for MPs, shifting it from a discretionary decision by Parliament to a structured adjustment linked to inflation. The system introduced in 2018 promotes a fair and transparent method for salary revisions, preventing arbitrary increases and ensuring financial responsibility, the official noted.
The last salary adjustment prior to the 2018 amendment occurred in 2010, when Parliament approved a bill to raise MPs’ monthly salaries from Rs 16,000 to Rs 50,000. This move faced considerable public backlash, as many viewed it as MPs granting themselves a threefold salary increase.
Nonetheless, some MPs, including Mulayam Singh Yadav and Lalu Prasad Yadav, contended that the increase was inadequate and demanded at least a fivefold rise in salaries.
With the revised mechanism, MPs' salaries are now automatically adjusted every five years based on the Cost Inflation Index. The base salary established in 2018 was set at Rs 1 lakh per month, supplemented by additional allowances, which include a constituency allowance of Rs 70,000 and a daily allowance of Rs 2,000, along with other benefits such as complimentary housing, travel, and utilities.
According to the Cost Inflation Index, MPs will now earn Rs 1.24 lakh per month—a 24 percent increase over a span of seven years, averaging an annual increase of roughly 3.1 percent.
This approach ensures that salary revisions are objective and transparent, relying on a recognized economic indicator rather than arbitrary decisions.
Consequently, salary adjustments occur systematically, eliminating the need for repeated parliamentary debates or political interventions.
As an exceptional measure during the Covid-19 pandemic, the government also enacted a 30 percent salary cut for MPs and ministers in April 2020 for a duration of one year. This decision aimed to bolster the financial resources of the central government in addressing the pandemic, as noted by the official.
The temporary reduction was intended to ensure that funds were available to support India's efforts in combating the crisis and provide relief to the public. This cut applied to all MPs, including ministers, and remained effective for a year.
