Salaries, Pensions and Allowances of Members of Parliament Act, 1954

Understanding Act of 1954: These are important Highlights

The Union Cabinet has approved an ordinance to amend the Salaries, Allowances and Pension of Members of Parliament Act, 1954.

• It will cut the salaries of Members of Parliament (MPs) by 30%, effective from 1^st April 2020.
• Apart from this, it has been decided to suspend the Members of Parliament Local Area Development Scheme (MPLADS) funds for two financial years (2020-21 to 2021-22).
• The saved amount will go to the Consolidated Fund of India to fight the Covid-19 pandemic.

Key Pointers from the recent amendment that took place:

• 30% Salary Cut
  • It is applicable to all MPs, including the Prime Minister and the Council of Ministers, for the financial year 2020-2021.
  • The President and Vice-President of India along with all the State Governors, have also decided on their own to take a 30% salary cut.
  • However, the amendment will only cut MPs’ salaries, not allowances or the pensions of ex-MPs.
  • According to the pay hike in 2018, each MP draws a monthly salary of ₹1 lakh, ₹70,000 as constituency allowance and ₹60,000 for running office besides other perks.

• Suspension of MPLADS
  • The amount saved from the scheme would be around ₹8,000 crores and will be redirected to the Consolidation Fund.
  • Many MPs had already pledged to use their MPLADS funds for efforts to combat the coronavirus pandemic.
  • 74 Rajya Sabha members had contributed a total of ₹100 crores, and 265 Lok Sabha members had given a total of ₹265 crores.
• Currently, the Lok Sabha has 542 members while the Rajya Sabha has a strength of 245 members, including 12 nominated.
• The comprehensive decision was taken to convey the message of social responsibility of the MPs.
• Other Previous Measures
  • The employees of the central government have already given one day’s salary on their own. However, it is not clear if they will face a pay cut or not.
  • The state government of Telangana had already announced salary cuts at all levels on 30^th March.
  • Government has announced various other measures including the Pradhan Mantri Garib Kalyan Yojana.
• The salary cut has been supported throughout the country. However, the suspension of MPLADS has been criticised on the grounds that it is a disservice to the constituents and will undermine the role and functions of the MPs. It is the centralisation of funds which goes against federalism.

Members of Parliament Local Area Development Scheme

• It was announced in December 1993 under the control of the Ministry of Rural Development. Later, in October 1994, it was transferred to the Ministry of Statistics and Programme Implementation.
• Objectives:
  • To enable MPs to recommend works of developmental nature with emphasis on the creation of durable community assets based on the locally felt needs to be taken up in their Constituencies.
    • Lok Sabha Members can recommend works within their constituencies and elected Members of Rajya Sabha can recommend works within the State they are elected from.
    • Nominated Members of both the Rajya Sabha and Lok Sabha can recommend works anywhere in the country.
  • To create durable assets of national priorities viz. drinking water, primary education, public health, sanitation and roads, etc.
• It is a Central Sector Scheme. The annual MPLADS fund entitlement per MP constituency is ₹5 crore.

Government Accounts

• Consolidated Fund
  • It was constituted under Article 266 (1) of the Constitution of India.
  • It is made up of:
    • All revenues received by the Government by way of taxes (Income Tax, Central Excise, Customs and other receipts) and all non-tax revenues.
    • All loans raised by the Government by the issue of Public notifications, treasury bills (internal debt) and from foreign governments and international institutions (external debt).
  • All government expenditures are incurred from this fund and no amount can be withdrawn from the Fund without authorization from the Parliament.
  • Each state can have its own Consolidated Fund of the state with similar provisions.
  • The Comptroller and Auditor General of India audit the fund and reports to the relevant legislatures on the management.
• Contingency Fund
  • It was constituted under Article 267 (1) of the Indian Constitution.
  • Its corpus is ₹500 crores.
  • It is used for meeting unforeseen expenditure.
  • Each state can have its own Contingency Fund of the state with similar provisions.
• Public Account
  • It was constituted under Article 266 (2) of the Indian Constitution.
  • The transactions under this account relate to debt other than those included in the Consolidated Fund of India.
  • The receipts under Public Account do not constitute normal receipts of Government hence Parliamentary authorization for payments is not required.
  • Every state can have their own similar accounts.

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