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The budget session of Parliament every year starts with the President’s Address to both Houses. In this speech, the President highlights the government’s achievements and legislative activities in the last year, and announces its agenda for the upcoming year. The address is followed by a motion of thanks that is moved in each House by ruling party MPs. This is followed by a discussion on the address and concludes with the Prime Minister replying to the points raised during the discussion.
Today, the Budget Session 2019 commenced with the President, Mr. Ram Nath Kovind addressing a joint sitting of Parliament. In his speech, he highlighted some of the objectives that the government has realised in the past year. The President also highlighted the progress made by the government under various development schemes such as the Swachh Bharat Abhiyan, the Pradhan Mantri Jan Dhan Yojana, and the Pradhan Mantri Gram Sadak Yojana.
Given that today’s address comes at the end of this government’s term, we examine the status of some key policy initiatives announced by the current government, that have been highlighted in speeches made in the past five years.
Policy priority stated in President’s Addresses 2014-2018 |
Current Status |
Economy and Finance |
|
Despite a global economic downturn, the Indian economy has remained on a high growth trajectory.
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Measures to deal with corruption, black money and counterfeit currency will be introduced
|
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To promote the concept of cooperative federalism through One Nation-One Tax and One Nation-One Market, the government introduced the Goods and Services Tax |
|
Agriculture |
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Agriculture is the main source of livelihood for a majority of people. For holistic development of the agricultural sector, the Pradhan Mantri Fasal Bima Yojana was launched in 2016 |
|
Employment and Entrepreneurship |
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The government has continuously worked for reforms of labour laws. Minimum wages have increased by more than 40%
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Infrastructure |
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Cities are the engines of economic growth. The Smart City programme was initiated to build modern amenities and infrastructure.
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All rural habitations will be connected with all-weather roads. So far, 73,000 kilometres of roads have been laid in rural areas.
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Housing is a fundamental right. All households shall have a dwelling unit under the Mission Housing for All by 2022.
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Health and Sanitation |
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Poor sanitation weakens the economic wherewithal of a poor household. The Swachh Bharat Abhiyan aims to ensure health and sanitation. |
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The government is committed to providing affordable and accessible healthcare to all its citizens, particularly the vulnerable groups. |
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Source: President’s Addresses 2014-2018; PRS.
For important highlights from the President’s address in 2019, please see here. For a deeper analysis of the status of implementation of the announcements made in the President’s addresses from 2014 to 2018, please see here.
[i] “Press Note on First Advance Estimates of National Income: 2018-19”, Ministry of Statistics and Program Implementation, Press Information Bureau, http://www.mospi.gov.in/sites/default/files/press_release/Presss%20note%20for%20first%20advance%20estimates%202018-19.pdf.
[ii] “Second Advance Estimates of National Income, 2017-18”, Ministry of Statistics and Program Implementation, Press Information Bureau, http://pib.nic.in/newsite/PrintRelease.aspx?relid=176847
[iii] “Second Advance Estimates of National Income, 2016-17”, Ministry of Statistics and Program Implementation, Press Information Bureau, http://pib.nic.in/newsite/PrintRelease.aspx?relid=158734
[iv] Overview-Monetary Policy, Reserve Bank of India, https://www.rbi.org.in/scripts/FS_Overview.aspx?fn=2752.
[v] “Foreign Exchange Reserves,” Reserve Bank of India, January 25, 2019, https://www.rbi.org.in/Scripts/WSSView.aspx?Id=22729.
[vi] RBI Database, https://dbie.rbi.org.in/DBIE/dbie.rbi?site=home.
[vii] Table No. 160, Handbook of Statistics on the Indian Economy, Reserve Bank of India, https://www.rbi.org.in/Scripts/AnnualPublications.aspx?head =Handbook%20of%20Statistics%20on%20Indian%20Economy
[viii] Lok Sabha Unstarred Question No. 1319, Ministry of Finance, December 22, 2017, http://164.100.47.194/Loksabha/Questions/QResult15.aspx?qref=59329&lsno=16.
[ix] “The Fugitive Economic Offenders Bill, 2018”, PRS Legislative Research, March 16, 2018, http://www.prsindia.org/sites/default/files/bill_files/Fugitive%20Economic%20Offenders%20Bill%20-%20Bill%20Summary.pdf.
[x] “The Prevention of Corruption (Amendment) Bill”, PRS Legislative Research, February 12, 2014, http://www.prsindia.org/sites/default/files/bill_files/Bill_Summary-_Prevention_of_Corruption_1.pdf.
[xi] “GST roll-out – Complete transformation of the Indirect Taxation Landscape; Some minute details of how it happened, Ministry of Finance”, Press Information Bureau, June 30, 2017, http://pib.nic.in/newsite/PrintRelease.aspx?relid=167023.
[xii] Lok Sabha Unstarred Question No. 17, Ministry of Agriculture and Farmers Welfare, December 11, 2018, http://164.100.47.190/loksabhaquestions/annex/16/AS17.pdf.
[xiii] “Year End Review, Ministry of Labour and Employment”, December 18, 2017, http://www.pib.gov.in/PressReleseDetail.aspx?PRID=1512998.
[xiv] Rate of Minimum Wages, Ministry of Labour and Employment, March 1 2017, https://labour.gov.in/sites/default/files/MX-M452N_20170518_132440.pdf.
[xv] Gazette Number 173, Ministry of Labour and Employment, January 19, 2017, Gazette of India, http://egazette.nic.in/WriteReadData/2017/173724.pdf.
[xvi] “Union Cabinet approves Atal Mission for Rejuvenation and Urban Transformation and Smart Cities Mission to drive economic growth and foster inclusive urban development”, Press Information Bureau, April 29, 2015, http://pib.nic.in/newsite/PrintRelease.aspx?relid=119925.
[xvii] “Shillong (Meghalaya) gets selected as the 100th Smart City”, Ministry of Housing and Urban Poverty Alleviation, Press Information Bureau, June 20, 2018, http://pib.nic.in/newsite/PrintRelease.aspx?relid=180063
[xviii] “Year Ender- Ministry of Housing and Urban Affairs-2018”, Ministry of Housing and Urban Affairs, Press Information Bureau, December 31, 2018, http://pib.nic.in/PressReleseDetail.aspx?PRID=1557895.
[xix] PMGSY Guidelines, Ministry of Rural Development, last accessed on October 23, 2018. http://pmgsy.nic.in/.
[xx] “Implementation of PMGSY”, Ministry of Rural Development, Press Information Bureau, December 27, 2018, http://pib.nic.in/newsite/PrintRelease.aspx?relid=186837.
[xxi] Online Management, Monitoring and Accounting System (OMMAS), Pradhan Mantri, Gram Sadak Yojana, last accessed on October 23, 2018, http://omms.nic.in/Home/CitizenPage/#.
[xxii] High Level Physical Progress Report, PMAYG, Ministry of Rural Development, last accessed on January 25, 2019, https://rhreporting.nic.in/netiay/PhysicalProgressReport/physicalprogressreport.aspx
[xxiii] “Year Ender-6-PMAY-Ministry of Housing and Urban Affairs, 2018”, Press Information Bureau, December 27, 2018, http://pib.nic.in/PressReleseDetail.aspx?PRID=1557462.
[xxiv] “Swachh Bharat Mission needs to become a Jan Andolan with participation from every stakeholder: Hardeep Puri, 1,789 Cities have been declared ODF conference on PPP model for waste to energy projects”, Ministry of Housing and Urban Affairs, Press Information Bureau, November 30, 2017, http://pib.nic.in/newsite/PrintRelease.aspx?relid=173995.
[xxv] “PM launches Swachh Bharat Abhiyaan”, Prime Minister’s Office, Press Information Bureau, October 2, 2014, http://pib.nic.in/newsite/PrintRelease.aspx?relid=110247.
[xxvi] “Individual Household Latrine Application”, Ministry of Housing and Urban Affairs, last accessed on January 30, 2019, http://swachhbharaturban.gov.in/ihhl/RPTApplicationSummary.aspx.
[xxvii] “Individual Household Latrine Application”, Ministry of Housing and Urban Affairs, last accessed on January 30, 2019, http://swachhbharaturban.gov.in/ihhl/RPTApplicationSummary.aspx.
[xxviii] Swachh Bharat Mission (Gramin), Ministry of Drinking Water and Sanitation, last accessed on January 30, 2019, https://sbm.gov.in/sbmdashboard/Default.aspx.
[xxix] “Ayushman Bharat for a new India -2022, announced”, Ministry of Finance, Press Information Bureau, February 1, 2018,s http://pib.nic.in/newsite/PrintRelease.aspx?relid=176049
[xxx] About NHA, Ayushmaan Bharat, Ministry of Health and Family Welfare, https://www.pmjay.gov.in/about-nha.
[xxxi] “Ayushman Bharat –Pradhan Mantri Jan AarogyaYojana (AB-PMJAY) to be launched by Prime Minister Shri Narendra Modi in Ranchi, Jharkahnd on September 23, 2018”, Ministry of Health and Family Welfare, Press Information Bureau, September 22, 2018, http://pib.nic.in/newsite/PrintRelease.aspx?relid=183624.
[xxxii] National Health Accounts, estimates for 2014-15 Ministry of Health and Family Welfare, https://mohfw.gov.in/newshighlights/national-health-accounts-estimates-india-2014-15.
This week, the centre issued two Ordinances to amend: (i) the Salary, Allowances, and Pension of Members of Parliament Act, 1954 to reduce the salaries of MPs by 30% for a period of one year, and (ii) the Salaries and Allowances of Ministers Act, 1952, to reduce the sumptuary allowance of Ministers by 30% for one year. The government also amended the rules notified under the 1954 Act to reduce certain allowances of MPs for one year, and suspended the MPLAD Scheme for two years. These changes are being made to supplement the financial resources of the centre to tackle the COVID-19 pandemic. These amendments raise larger questions on the effect they have on the capacity of the state to fight the pandemic, and the way in which salaries of MPs should be determined.
Overview of Amendments
The 1954 Act lays out the salary and various allowances that an MP is entitled to during their term in Parliament and also provides pension to former MPs. MPs receive a salary of one lakh rupees per month, along with compensation for official expenses through various allowances. These include a daily allowance for attending Parliament, constituency allowance and office expense allowance. Under the first Ordinance, the salaries of MPs are being reduced by 30%. Further, the constituency allowance and office expense allowance are being reduced by Rs 21,000 and Rs 6,000, respectively.
The 1952 Act regulates the salaries and other allowances of Ministers (including the Prime Minister). The Act provides for the payment of a monthly sumptuary allowance (for expenditure incurred in entertaining visitors) at different rates to the Prime Minister, Cabinet Ministers, Ministers of State, and Deputy Ministers. The second Ordinance is reducing the sumptuary allowances of Ministers by 30%.
Note that the 1952 Act pegs the salaries, and daily and constituency allowances of Ministers to the rates specified for an MP under the 1954 Act. Similar provisions apply to presiding officers of both Houses (other than Chairman of Rajya Sabha) who are regulated by a different Act. Therefore, the amendments to the salaries and constituency allowance of MPs will also apply to Ministers, Speaker and Deputy Speaker of Lok Sabha, and Deputy Chairman of Rajya Sabha. The salary of the Chairman of Rajya Sabha will continue to remain unaffected by the Ordinances (Rs 4 lakh per month).
Further, since 1993, MPs can also identify projects and sanction certain funds every year for public works in their constituencies under the Members of Parliament and Local Area Development (MPLAD) Scheme, 1993. Since 2011-12, each MP can spend up to Rs five crore per year under the scheme. The Union Cabinet has approved the suspension of the MPLAD Scheme for two years. Table 1 below compares the changes in salaries, allowances and MPLAD entitlements of MPs.
Table 1: Comparison of changes in the salaries, allowances and MPLAD entitlements of MPs
Feature |
Previous entitlement (in Rs per month) |
New entitlement (in Rs per month) |
Changes for the period of |
|
Salary |
1,00,000 |
70,000 |
One year |
|
Constituency allowance |
70,000 |
49,000 |
One year |
|
Office allowance |
60,000 |
54,000 |
One year |
|
Of which |
Office expenses |
20,000 |
14,000 |
- |
|
Secretarial assistance |
40,000 |
40,000 |
- |
Sumptuary allowance of Prime Minister |
3,000 |
2,100 |
One year |
|
Sumptuary allowance of Cabinet Ministers |
2,000 |
1,400 |
One year |
|
Sumptuary allowance of Ministers of State |
1,000 |
700 |
One year |
|
Sumptuary allowance of Deputy Ministers |
600 |
420 |
One year |
|
Funds under MPLAD Scheme |
5 crore |
NIL |
Two years |
Sources: 2020 Ordinances; Members of Parliament (Constituency Allowance) Amendment Rules, 2020; Members of Parliament (Office Expense Allowance) Amendment Rules, 2020; “Cabinet approves Non-operation of MPLADs for two years (2020-21 and 2021-22) for managing COVID 19”, Press Information Bureau, Cabinet, April 6, 2020; PRS.
Effect of amendments on resources to fight COVID-19
The proposed reduction to the salaries and allowances of MPs and Ministers amounts to savings of around Rs 55 crore, and the suspension of the MPLAD scheme is expected to save Rs 7800 crore. These measures comprise 0.03% and 4.5% respectively, of the estimated amount required to fight the immediate economic distress unleashed due to COVID. Government has estimated Rs 1.7 lakh crore as the requirement for COVID relief measures under the Pradhan Mantri Garib Kalyan Yojana. Therefore, such measures to decrease MP salaries and allowances toward increasing the pool of funds for fighting the pandemic are likely to have an almost negligible impact.
How might MP salaries be set
Each MP is required to represent the interests of his constituents, formulate legislation on important national matters, hold the government accountable, and ensure efficient allocation of public resources. The salary and office allowance of an MP must be assessed in light of the responsibilities expected to be discharged by them. Ensuring MPs are reasonably compensated in terms of salaries allows MPs the means to be able to discharge their duties devotedly, enables them to make decisions in an independent manner and guarantees that citizens from all walks of life can stand a chance of running for Parliament. The question remains – who decides what is reasonable compensation for MPs.
Currently, MPs in India decide their own salaries which is passed in the form of an Act of Parliament. MPs setting their own pay leads to a conflict of interest. A way to resolve this is by setting up an independent commission to determine that salaries of MPs. This is a practice followed in certain democracies, such as New Zealand and United Kingdom. In some other countries, it is pegged to annual wage rate index such as Canada. Table 2 lists various methods used in some other countries to set salaries for legislators.
Table 2: Methods for setting salaries in different democracies
Countries |
Process of determining salary of legislators |
India |
Parliament decides by passing an Act. |
Australia |
Remuneration Tribunal decides the salary. This is revised annually. |
New Zealand |
Remuneration Authority decides the salary. This is revised annually. |
UK |
Independent Parliamentary Standards Authority sets the pay annually as per the changes in average earnings in the public sector given by the Office for National Statistics. |
Canada |
Member’s pay is adjusted each year to federal government’s annual wage rate index. |
Germany |
Based on income of a judge of the highest federal court and adjusted annually by the Parliament. |
Sources: Various government websites of respective countries; PRS.
India has experience with appointing independent commissions to examine the emoluments of government officials. The central government periodically sets up pay commissions to review and recommend changes to the wage structure of government employees with a view to attract talent to government services. The latest Central Pay Commission was constituted in 2014 to decides the emoluments of central government employees, armed forces personnel, employees of statutory bodies, and officers and employees of the Supreme Court. Typically, the Commissions have been chaired by a former Judge of the Supreme Court, and have included members representing government service and independent experts.
Suspending MPLADS
In contrast to these amendments, the suspension of the MPLAD Scheme is a positive step.
The MPLAD Scheme (MPLADS) was introduced in December 1993 to enable legislators to address local developmental problems for their constituents. MPLADS allows legislators to earmark up to five crore rupees every year on public works projects in their constituency and recommend these projects to the district authorities for implementation. Typically, funds under the MPLADS are expended on construction or installation of public facilities (such as school buildings, roads, and electrical facilities), supply of equipment (such as, computers in educational institutions) and sanitation projects.
In 2010, a five-judge bench of the Supreme Court decided a challenge to the constitutionality of the MPLADS. It was argued that MPLADS violates the concept of separation of powers between the executive and the legislature since it provides the MP with executive powers on local public works. The Court ruled that there was no violation of the principle of separation of powers because the role of an MP in this case is recommendatory and the actual work is carried out by the local authorities.
However, the Scheme has undermined the role of an MP as a national-level policy maker. The role of an MP is to determine whether government’s budgetary allocations across development priorities are appropriate and once the money is sanctioned by Parliament is it being spent in an efficient and efficacious manner. However, focus on local administration-level issues, such as development of roads or sanitation projects, obscures the role of the MP in conducting oversight. Another fall out of having MPs responsible for MPLADS is that it skews the expectations of citizens have of their MPs – holding them accountable for resolving local development issues rather than broader policy and legislative decision making. The suspension of MPLADs will allow for MPs to focus on their role in Parliament.
The Ordinance route
Through these Ordinances, the executive has amended the salaries and allowances of MPs and Ministers. In principle, Parliament is discharged with law-making powers. In exceptional circumstances, the Constitution permits the executive to make laws through Ordinances if Parliament is not in session and immediate action is required. The two Ordinances will have to be ratified by Parliament within six weeks of its sitting in order to continue to have the force of law. Interestingly, India is one of the few countries, apart from Bangladesh and Pakistan, that vests the executive with authority to make laws, even if temporary in nature.
The Ordinance amending the salaries of MPs also raises a question on whether it is appropriate that the executive has the power to amend the emoluments of MPs – how would this affect the independence of the legislature which is tasked with holding the executive accountable.