Facts Box: Salaries and Allowances of Ministers (Amendment) Bill, 2020

The Lok Sabha recently passed Salaries and Allowances of Ministers (Amendment) Bill, 2020. According to the amendment, the salaries of the parliamentarians are to be reduced by 30% for one year to mitigate fallout of disruptions that were created by COVID-19.

Highlights

The bill replaced the “Salaries and Allowances of Ministers (Amendment) ordinance”, 2020. It amends the following acts

  • Salaries, Allowances and Pension of Members of Parliament Act, 1954. This will reduce their salaries by 30%
  • Salaries and Allowances of Ministers Act, 1952. This will reduce the sumptuary allowance of ministers by 30%.

Concerns

  • The proposed reduction in salaries is to have negligible impact on the financial resources needed to fight against COVID-19. When the salaries and allowances are reduced, the amount saved will be Rs 54 crores. This is less than 0.001% of the special economic package of Rs 20 lakh crores that was allocated by the centre.
  • The allowances of Indian MPs differ from that of other countries. In India, the MPs are provided housing. On the other hand, the MPs of UK are provided with allowances to rent a house. There is no such allowance in US. However, these MPs are provided with office spaces that are not provided to Indian MPs.

Constitutional Provisions

Article 106 empowers the MPs to determine salaries and allowances by enacting laws. In 2018, Parliament revised the salary, pension, daily allowance of all MPs. The amendment said that the salaries will be revised every five years based on cost inflation index that is provided under Income-Tax Act, 1961.

In the context of COVID-19 outbreak, in April 2020, the GoI reduced the emoluments of MPs and ministers.

Salary of parliamentarians in different countries

In India, the salary of parliamentarians is revised every five years based on the cost inflation index. In Canada, the salary is fixed based on average consumer price index of the previous year. In short, the salary is fixed based in inflation.

In UK, Australia, New Zealand the salary is set by an independent authority. In UK, the authority is made is former judge, former MP and an auditor. In New Zealand, the authority is made of judges and MPs.

In France, the salary is indexed to the civil servants’ pay.

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