Number wise: Hike in MLA salaries outstripped growth in common man's income

Delhi lawmakers just gave themselves a salary hike, joining counterparts in widening the gap with their voters' income

In 2013, researchers at Columbia University, Princeton and DONG Energy reached an interesting conclusion. They found that raising politicians’ salaries did not necessarily improve governance. It may even have the opposite effect, according to the research published in Chicago Booth Review.

The researchers studied the impact of salary revisions for the European Union’s members of parliament and concluded that salary hikes had an insignificant effect on work and attendance. There are other studies, however, that conclude the opposite.

Such hikes make headlines because politicians, and not market forces, determine their salaries. In India, the latest to upgrade are Delhi MLAs, who approved a pay revision of 66 per cent after 11 years.

Even after the revision, Delhi MLAs will not be the highest paid in the country. An analysis based on government sources and media reports shows that Telangana MLAs enjoy the highest remuneration. Telangana MLAs earn 2.7 times more per month in allowances and salary than the Rs 90,000 a Delhi lawmaker will get post-revision. Among the larger states, Maharashtra pays Rs 230,000 monthly to its legislative assembly and council members, whereas Karnataka pays Rs 205,000.

The analysis found Bihar had the widest gap between an aam aadmi’s income and MLA salary and benefits. The difference between MLA salary in Bihar and the per capita net state domestic product was 34.6 times. The difference was 34.2 times in Uttar Pradesh and 33.2 times in Jharkhand. After the salary revision, an MLA will get triple the amount an average person in Delhi earned in 2019-20.

The gap is wider in some other states. In Telangana, the compounded annual growth rate in MLA salaries was 21.5 per cent between 2011 and 2016. Per capita income in the state increased only by 10.1 per cent between 2011-12 and 2019-20. (2011 figures are from the state of Andhra Pradesh prior to bifurcation). The salary of members of parliament had witnessed a CAGR of 8.7 per cent between 2011 and 2018.

These calculations do not consider all the benefits that MLAs and MPs enjoy. Most state governments bear income tax for MLAs. The state exchequer covers travel expenditures to the tune of lakhs of rupees per MLA. Uttar Pradesh grants nearly Rs 4 lakh of railway coupons to MLAs for travel. MLAs and MPs are entitled to a pension if they serve five years in office. In some states, pensions are higher than the basic salary. A person aged 30 will have to work 35 years and contribute Rs 3,200 per month to earn a pension of Rs 50,000 at retirement, in some states people can do so by getting elected as an MLA for just one term.

Are MLAs/MPs justified in asking for pay revisions? While there is undoubtedly a need to make salaries more market-linked, benefits need to be pared down as well.