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Legislations, The Law

Salaries and Allowances of Ministers (Amendment) Ordinance, 2020

The Union Cabinet approved this Amendment during the Coronavirus Pandemic directing that salaries of all Members of Parliament will be cut by 30% along with a two-year suspension of the MP Local Area Development scheme so that the amount can be saved and used to fight the COVID-19 pandemic in India.

By: Sanya Barman, 3rd year BLS LLB, Rizvi Law College, Mumbai.

Introduction

India is a developing country and its hard to fight situations like a pandemic while managing the economy at the same time for the government. After a long debate and considering all the aspects, the Union Cabinet decided to cut off the salaries of Ministers and Government officials by 30% and decided to use that money in the fight against COVID-19.

In April 2020, six states reduced the salaries of their respective MLAs, Ministers, Speakers, Whips, and MLCs. And the cutoff salary percentage was provided to the state government as a relief fund. The states like Odisha, Andhra Pradesh, and Telangana delivered guidelines conceding the salaries of their MLAs, MLCs, and Ministers. 

The Central Government passed an order for changes in the Salaries and Allowances of Ministers Act, 1952, section 5 shall be numbered as sub-section (1) thereof, and after sub-section(1) as so numbered, the following sub-section shall be inserted, namely:-

“(2) Notwithstanding anything contained in sub-section (1), the sumptuary allowance payable to each minister under the sub-section shall be reduced by thirty percent for a period of one year commencing from the 1st April 2020, to meet the exigencies arising out of Corona Virus (COVID-19) pandemic.”

This information was given by Prakash Javadekar in a press conference, chaired by Honorable Prime Minister Narendra Modi, who approved the ordinance.

Highlights of the Bill

  • The bill seeks to reduce the salaries of MPs and the sumptuary allowance of Members of Parliament.
  • It diminishes the constituency allowance and office expenses allowances of MPs.

These changes are made operative for a tenure of one year, starting from 1st April 2020.

Important Addition

The Salary, Allowances, and Pension of Members of Parliament Act, 1954 provide for the salary, allowances, and pension of Members of Parliament.

Article 106: The members of either House of Parliament shall be entitled to receive such salaries and allowances as may from time to time be determined by Parliament by law.

Issues for consideration of the bill

The Ordinances and Rules have reviewed the salaries of legislators downhill. The issues concerning the salaries of legislators are multifaceted.

These include the queries of ‘who’ decides what is a prudent reimbursement for legislators and ‘what’ should be the appropriate reimbursement for them.

As salaries are being cut to rise resources to handle the coronavirus pandemic, the other query is whether the amount of funds released through these measures is evocative. 

The method for setting the salary in India is that according to Article 106 and Article 195 of the Constitution, the MPs, and MLAs, correspondingly regulate their salaries and allowances by enacting the law in their respective legislatures. 

In some states, laws have been amended to set the salary and allowances for legislators to decrease the conflict of interest and ensure consistent revision. In 2018, through the Finance Act, the salary, allowances, and pension of Members of Parliament Act, 1954 was amended by the Parliament of India to deliver that the salary, daily allowances, and pension of MPs shall be amplified every five years, based on cost inflation index provided beneath of the Income-tax Act, 1961.

In countries like the UK, the independent authority is appointed to decide the salaries of a legislator while in France the MP’s salaries are fastened to the average salary of the highest-ranking civil servants.

Opposition Reaction

The opposition party Indian National Congress gave their full support to the Central Government on their ordinance bur found that suspending the MPLAD scheme would weaken the role of MPs.

They found that MPLAD is meant to implement developmental works in the constituency and dangling it will be enormous damage to the constituents and will challenge the role and purposes of MP.

Effect of the amendment on resource to fight COVID-19

With the introduction of amendments, the many economist and ministers wondered that what difference can a small cut-off from the salaries of MPs and MLAs can make to fight the pandemic in the country.

After a detailed study of the expenditure for 2020-21 for the states, it was found out that total savings per year across these states ranged from around Rs. 2.1 Crore in Bihar to Rs. 17.4 Crore in Uttar Pradesh. This shows that the measures taken to reduce the salaries showed a great impact on the increment of the pool of funds for fighting the pandemic and would likely have no impact on the finance of the state.

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