The cabinet has decided to introduce a Bill to revise the salary and allowances of members of parliament (MPs). Reports indicate that the salary of MPs is being raised to `50,000 per month, and several allowances and office expense limits are being doubled.

The salary and allowances of are stated by law enacted by MPs themselves. This creates a direct conflict of interest and a subsequent public uproar every time they increase the salary. Consequently, MP salaries are far lower than that for any comparable level of responsibility. Indeed, the base pay of an MP is approximately the same as that of a government employee with two decades of service at the lowest band. Therefore, it is important to develop a mechanism to determine the salaries and perquisites of MPs.

How we pay our MPs today
The base salary of an MP is Rs 16,000 per month. In addition, the MP gets a daily allowance of Rs 1,000 for every day of attendance in parliament. (Given that Parliament sits for about 70 days, this works to about Rs 6,000 per month for an MP with 100% attendance). Other benefits include medical cover and pension of  Rs 8,000 per month (increased by Rs 800 per month for every year of being an MP). They get a flat or hostel accommodation in Delhi; for a bungalow, they pay a license amount.

Some of the official expenses incurred by MPs are also reimbursed. This includes Rs 20,000 per month as constituency allowance, Rs 10,000 for one computer literate assistant in Delhi, Rs 4,000 for an assistant in the constituency. They are reimbursed for 34 single journey air tickets per year for travel within India for themselves and family. They are allowed two fixed line and one mobile phone, with a total of 1.5 lakh local call equivalent (including STD, fax and mobile calls) per annum; in addition Rs 1500 per month for a broadband internet connection. They get stationery for Rs 4000 per month and franking of Rs 2000 per month.

It can be seen that the base salary of an MP is around 5 percent of the salary of national legislators in many democracies (Table 1). Even adjusted for the purchasing parity (taking the purchasing parity of one US dollar at equivalent to Rs 10), the salary of Indian MPs is only about 25 percent that of their counterparts. It is also interesting to see that Indian MPs are paid much lower than that for other holders of public office and senior civil servants (Table 2). Indeed, the salary is comparable to that of a Band-D (lowest level) employee of the government of India. Thus MPs get a fifth of the salary of a Secretary to the Government of India, even though they outrank them in the order of precedence.

Issues of concern
First, the current base pay is very low. This deters many professionals from entering public service as legislators. The low salary may also compromise the ability of MPs to work in an effective and independent manner.

Second, MPs set their own salaries. This results in a conflict of interest. This also causes adverse comments from the media and the public whenever salaries are raised. Consequently, salaries have not kept pace with the general wage rise and price levels.

Third, official expenses of MPs are currently called “allowances” and therefore viewed as perquisites. These expenses include office space, research and other support staff, travel and communication expenses. These expenses should not be seen as the MPs’ remuneration package. They are simply the cost associated with the office. As an analogy, the office space and official support staff of senior government officers or private sector executives are not viewed as part of their pay package.

Pay principles
These three issues could be resolved if the following three main principles are followed.

First, the salary of MPs should be reasonable and sufficient for them to attract professionals and enable them to work as MPs in an independent manner.

Second, the salary of MPs should not be set by MPs themselves.

Third, official expenses of MPs including office space and staff should be set separately and not be seen as a part of their pay package.

How others do it
Indeed, some democracies have developed mechanisms such as an independent authority to determine and revise the salary of legislators. This is similar to the Pay Commission for central government employees. Such a structure helps resolve the conflict of interest, and enables an independent body to recommend a compensation package appropriate for the responsibilities of legislators.