Saturday, October 3, 2015

New Pay Commission Proposed for deciding Member of Parliament (MP) Salaries

An independent Pay Commission has been proposed by the Ministry to recommend salaries and allowances of Members of Parliament. Previously, Seventh Pay Commission for deciding the salaries of lakhs of Central Government Employees was constituted to recommend the new pay structure of the employees. Report of seventh pay commission is yet to be submitted to the Government of India by the Pay Commission. Now, as per the report published in a Newspaper, MPs draw a basic salary of Rs 50,000 per month at present. They also draw Rs 2,000 as daily allowance when Parliament is in session. So, complete story is being enumerated for the readers:




With Members of Parliament (MP) most often bearing the brunt of public criticism for getting "hefty pay and perks", the parliamentary affairs ministry has proposed an independent commission to recommend salaries and allowances for MPs.

Even as Parliamentary Affairs minister Venkaiah Naidu expressed hope that such a commission (if agreed to by parliamentarians) would bring in a "transparent and equitable" mechanism to ensure that salaries are not so low that they defer suitable candidates; questions are being raised about the entire issue of MP emoluments itself.

MP salaries are governed by the Salary, Allowances and Pension of Members of Parliament Act, 1954 which has been amended over the years to revise the pay of MPs. 


After it was amended last in 2010, MPs at present draw a basic salary of Rs 50,000 per month. Apart from this, they draw Rs 2,000 as daily allowance when Parliament is in session, Rs 45,000 as office allowance and Rs 45,000 as Constituency allowance. Apart from these, as per the Act they are entitled to travel, housing and medical benefits as well as a travel allowance.

As per the Association of Democratic Reforms (ADR), "on an average, an MP of the 16th Lok Sabha took home Rs 20.5 lakh in salary and allowances in the first ten months." 


According to ADR, Rs 112 crore was spent on the MPs of the 16th Lok Sabha.

Professor Jagdeep Chhokar (formerly Director IIM Ahmedabad) of Association of Democratic Reforms (ADR) speaking to Business Standard said, "The terminology of 'salary' for MPs is completely misleading and erroneous, it gives a very limited picture. It does not take into consideration the ample non-monetised benefits such as free travel for a companion on air and railways, the prime locality housing they get in the capital, the medical benefits, et cetera." Chhokar argues that such "hidden subsidies" must be removed and quantified before the issue of revision of salaries is debated. "Its not a question of how much they get but rather how much is spent by the nation to keep an MP," asserts Chhokar.


Source: The Business Times

Seventh Pay Commission May Cause Inflation

The Sen Times has published an article regarding general apprehension for inflation that may be caused by Seventh Central Pay Commission set up by Government for Central Government Employees.



It is anticipated prices of goods could rise, causing inflation, as soon as the Seventh Pay Commission announces the revised pay-scale for central government employees and the states government employees would have to bear the brunt.

Accordingly, the implementation of the Seventh Pay Commission’s recommendations will ravage the finances of the central and state governments.
Inflation has been whacking Indian budgets over the last few years. What has hurt the common man even more is food inflation. Food prices have risen at a much faster pace than overall prices.

The deficient monsoon rainfall and drought conditions in several parts of the country have accentuated the pressure on food prices, pushing  up the overall inflation rate.

The Reserve Bank of India (RBI) cut interest rates by 50 basis points on Tuesday in a bid to kickstart economic growth, following a sharp drop in inflation.

The inflation has stayed high in the past few years—the Consumer Price Index (Industrial Workers) has averaged over 9% in the past eight years, which means cost of living has gone up significantly and hence necessitates higher compensation for workers also.

The dearness allowance of government staff has already touched 119%, which along with the rise in other allowances have more than doubled salaries since 2006.

It is expected the Seventh Pay Commission to recommend 3 times hike in salaries across various grades from Sixth Pay Commission levels apart from a further rationalization of government employees.

There is a perception that government employees’ higher salaries boost spending on housing, automobiles and consumer electronics.
Initial estimates suggest the seventh pay commission could add Rs 1,00,619 crore to the central government’s wage bill.

The central government pay and allowances amount to 1 per cent of GDP today. State wages amount to another 4 per cent, making for a total of 5 per cent of GDP.

The medium-term expenditure framework recently presented to Parliament by Finance Minister Jaitley, which looks at an increase in pay of 16 per cent for 2016-17 consequent to the Seventh Pay Commission award.

That would amount to an increase of 0.8 per cent of GDP. This is a one-off impact.
However, the Seventh Pay Commission is ready with its recommendations on revising emoluments for nearly 50 lakh central government employees and 55 lakh pensioners, and will soon submit report to the Finance Ministry.

Headed by Justice Ashok Kumar Mathur, the Commission was appointed in February 2014 and its recommendations are scheduled to take effect from January 1, 2016.

The government constitutes the Pay Commission almost every 10 years to revise the pay scale of its employees and often states also implement the panel’s recommendations after some modifications.

As part of the exercise, the Commission holds discussions with various stakeholders, including organisations, federations, groups representing civil employees as well as defence services.
Meena Agarwal is the secretary of the Commission. Other members are Vivek Rae, a retired IAS officer of 1978 batch and Rathin Roy, an economist.

The Sixth Pay Commission was implemented with effect from January 1, 2006, the fifth from January 1, 1996 and the fourth from January 1, 1986.


Source: TST
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