Authored by Anil Nair and CV Madhukar PRS just concluded a workshop for MLAs from 50+ from more than a dozen states. What an AMAZING experience this was, even though this is the sixth such workshop we have held in this past year! This three day workshop on 'Mastering the Budget' was designed to help MLAs understand how to work with budget documents and numbers, find trends, understand the most critical macro numbers to track, etc. The second day of the workshop was tailored to reflect on the big thematic issues that have an impact on state finances. The Fiscal Responsibility and Budget Management Act, the Goods and Services Tax, the pattern of quantum of funds flow from the Centre to the state and local governments, the 13th Finance Commission, etc. The final day was devoted to doing an inter-state comparison of states on important budget parameters, and gleaning lessons from them. The idea for this budget workshop germinated at a previous workshop held at IIM Bangalore. The participating MLAs requested PRS to organise a special session on 'Mastering the Budget'. So this workshop was being organised as a result of their feedback. The choice of location was easy -- this was held at the National Institute for Public Finance and Policy in Delhi, which is amongst India's foremost institutions working on state budgets and public finance issues. Invitations were sent out to MLAs in several states. Responses started coming in within a few days, with about 70 confirmations. But there is always an uncertainty on the participation until the very last minute because elected politicians have immense demands on their time, at least some of which are unpredictable. So it was heartening to see that more than 50 MLAs came to the workshop representing 15 states -- Bihar, Rajasthan, Odisha, Uttar Pradesh, Assam, Kerala, West Bengal, Andhra Pradesh, Meghalaya, Tamil Nadu, Madhya Pradesh, Himachal Pradesh, Gujarat, Haryana, Manipur. The participants ranged from first time MLAs (about 50%), to a sitting Minister, a sitting Speaker, former Ministers, and senior leaders of political parties from some states. But the best part about the interaction in this workshop was that even on seemingly complex issues being discussed in the classroom, the MLAs were not mere recipients of 'gyan' that was being dished out. They had important questions to raise, and well articulated points of disagreement with the faculty, and brought in practical perspectives that might not have otherwise come up in the discussions. They went beyond the scope of the workshop to engage the economists on discussions on subjects like FDI in retail, state of India’s economy… Based on our experience of several workshops with MLAs, we want to share some observations about the participating MLAs: - There are MLAs in every state who want to understand substantive policy issues, and are willing to invest time and energy to do so. - When the MLAs participate in these workshops, they choose to do so on their own, and are not compelled by anyone to do so. - The sessions almost always begin and end on time, even in the freezing cold mornings in the Delhi winter. - The MLAs are very engaged in the discussions, ask questions, and bring in their experiences into the classroom discussions. - They keep partylines completely out of the substantive classroom discussions, and in the rare event that some new participant mentions anything partisan, other participants quickly ask him to avoid making any such mentions. In 2011, we have engaged with over 250 MLAs through these workshops and more. These workshops are just a starting point of what we hope will develop into a sustained, longer term engagement with MLAs on policy issues coming up in their states. In an important partnership with the Indian School of Business, Hyderabad, PRS has already conducted two workshops at the world class facilities at the ISB campus, and is planning to hold more in 2012. Just as PRS engages with about 300 MPs in Parliament, the hope is that more MLAs will be able to derive value from the work of PRS in the years to come, thereby making their decisions better informed. Some feedback from MLAs from our earlier workshops can be seen here: http://www.youtube.com/watch?v=9XlgKCp2bvs or http://www.youtube.com/watch?v=01kLLTVtJOU&feature=related or http://www.youtube.com/watch?v=WA4NZqCj2xk&feature=related
The Lok Sabha has passed the bill to revise the salary of members of parliament. Much of the debate in the media has been on the wealth of current MPs and the lack of accountability. It is important to focus as well on structural issues related to remunerating legislators. Under the bill, the base salary of MPs is being raised to Rs.50,000 from Rs.16,000 per month. The daily allowance paid to MPs when they attend parliament is being hiked to Rs.2,000 from Rs.1,000. The constituency allowance is being increased to Rs.45,000 per month from Rs.20,000 and office expenses (for staff, stationery and postage) to Rs.45,000 per month from Rs.20,000. Pension for former MPs will be Rs.20,000 per month instead of the present Rs.8,000. Other than these, MPs get accommodation in Delhi, which varies from a hostel in Vitthalbhai Patel House to two-bedroom flats and bungalows, all in central Delhi. MPs get reimbursement of electricity, water, telephone and internet charges. They (and their family) are also reimbursed for 34 one-way air tickets from their constituency to Delhi. In a parliamentary democracy, compensation for legislators should be sufficient to ensure their independence and autonomy. It should attract professionals who can devote their full time to legislative work. There should be a sufficient support system to enable legislators perform their duties effectively. There are mainly three issues that need to be resolved while fixing the compensation package for legislators. First, MPs fix their own salaries and allowances, which results in a conflict of interest. Second, every time the salary is revised upwards, there is an adverse media and public reaction. The outcome is that MPs' salaries are significantly lower than that for any other position of similar responsibility in the public or private sector. The low salaries may deter honest persons, without other income sources, from contesting elections. Third, reimbursements of office expenses are classified as 'allowances'. Thus, expenses for office staff, telephone charges, etc. are often seen as part of their compensation. Contrast this with the treatment for government or private sector employees. The costs of office support staff, rental, communication and travel costs are not counted as their salary or perks. The process in India is similar to that in some countries. The US Congress and the German Bundestag determine their own salaries. There are two alternative approaches seen in some other democracies. Some countries appoint an independent authority to determine salaries. Some others peg the salary to that of public officials. For example, New Zealand has a remuneration tribunal which is tasked to fix salaries based on being (a) fair relative to levels of remuneration elsewhere; (b) fair to person being remunerated and the taxpayer; (c) adequate to recruit and retain competent persons. In Canada, a commission is appointed after every general election and salaries are then indexed to the federal government's annual wage rate index. Australia has a remuneration authority that links the salary to that in the Principal Executive Office. In the UK, the Senior Salaries Review Board determines salaries, which are then voted upon by parliament. The Scottish parliament indexes its salaries to that of British MPs. In France, the salary of the legislator is the average of the highest and lowest paid official in the seniormost level of the government. There were two distinct themes during last week's Lok Sabha debate. Several MPs discussed structural issues. Some MPs - L.K. Advani, Ramachandra Dome, Sanjay Nirupam, Shailendra Singh and Pinaki Misra - suggested that the government establish an independent commission for determining salaries. Advani pointed out that a decision to that effect had been taken in an all-party meeting held by the Speaker in may 2005 and demanded that the government announce the formation of such a commission before the end of the current session of parliament. Some MPs - Dhananjay Singh, Sanjay Nirupam and Shailendra Kumar -- focussed on the need for support structures such as office space, research staff and assistants in the constituency. They felt that these would help MPs examine proposed laws and rules and monitor the work of the government. Nirupam and Misra suggested that MPs' salaries be linked to performance; salaries should be cut for any time lost due to disruption. Some MPs highlighted the need for pension and accommodation for former MPs. Sharad Yadav, Raghuvansh Prasad Singh and Sansuma Khunggur Bwiswmuthiary requested that the pension be raised to Rs 25,000 per month. Yadav and Bwiswmuthiary also said that former MPs be allocated residential accommodation in Delhi. The bill will next be discussed in the Rajya Sabha. The government agreed that there is merit in forming an independent commission. It is however uncertain whether the government will accede to Advani's demand that the commission be announced in the next couple of days. - M.R. Madhavan This column has been published by IANS today.
