Why Modi Govt Devised Inflation-Linked Mechanism To Appraise MPs' Salaries, Junking Arbitrary Hikes
Sources say that in 2016, Prime Minister Narendra Modi shared the strong view that MPs should not decide their pay package and decisions on such matters should either be taken by a body similar to the pay commission or they be linked to hikes given...Read More
Members of Parliament have got a pay hike as salaries are now automatically adjusted every five years based on the Cost Inflation Index, government sources said. This is a structured, inflation-linked mechanism for MPs’ salaries that Parliament adopted at the urging of Prime Minister Narendra Modi, the sources added.
A recent notification from the ministry of parliamentary affairs announced a 24% increase in the salaries, allowances, and pensions of Members of Parliament and former MPs. The notification revises the monthly salary of MPs from Rs 1 lakh to Rs 1.24 lakh, with effect from April 1, 2023.
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Sources say that in 2016, Prime Minister Narendra Modi shared the strong view that MPs should not decide their pay package and decisions on such matters should either be taken by a body similar to the pay commission or they be linked to hikes given to certain posts and ranks from time to time.
Sources added that the PM advocated that the salary revision mechanism for MPs be changed from a discretionary decision by Parliament to a structured adjustment linked to inflation. The mechanism introduced in 2018 ensures a fair and transparent approach to salary revisions, preventing arbitrary increases and ensuring financial prudence.
The Finance Act of 2018 amended the Salaries, Allowances, and Pension of Members of Parliament Act, 1954, to link MPs’ salaries to inflation, specifically using the Cost Inflation Index (CII) published under the Income Tax Act of 1961. Before this amendment, salary revisions were conducted on an ad hoc basis and required parliamentary approval each time. The amendment aimed to depoliticise the process and introduce a systematic mechanism for salary adjustments, sources said.
What happened earlier
The last revision before the 2018 amendment took place in 2010, when Parliament passed a bill to increase MPs’ monthly salaries from Rs 16,000 to Rs 50,000. This decision led to significant public criticism, as many perceived it as MPs granting themselves a three-fold pay hike.
Under the revised mechanism, MPs’ salaries are now automatically adjusted every five years based on the Cost Inflation Index. The base salary in 2018 was set at Rs 1 lakh per month, with additional allowances, including a constituency allowance of Rs 70,000 and a daily allowance of Rs 2,000, along with other benefits such as free housing, travel, and utilities.
Now, as per the Cost Inflation Index, MPs will receive a salary of Rs 1.24 lakh per month, a 24% increase over a seven-year period, which translates to an average annual increase of approximately 3.1%.
Sources say that this process ensures that salary revisions are objective and transparent, relying on an established economic indicator rather than arbitrary decisions. Consequently, salary adjustments occur systematically without the need for repeated parliamentary debates or political interventions.
Temporary salary reduction during Covid pandemic
As an extraordinary measure during the Covid-19 pandemic, the government implemented a 30% salary reduction for MPs and ministers in April 2020 for a duration of one year. This decision was taken to supplement the financial resources of the central government in tackling the pandemic.
The temporary reduction was aimed at ensuring that funds were available to support India’s efforts to combat the crisis and provide relief to the public. The cut applied to all MPs, including ministers, and remained in place for a year.
States follow arbitrary system
Sources say many state governments continue to follow an arbitrary and ad hoc mechanism for deciding their own salaries, granting themselves extraordinarily high hikes.
Like during the 2025 Budget presented recently, Karnataka Chief Minister Siddaramaiah approved a 100% salary hike for himself, effectively doubling the salaries of the chief minister, ministers, and MLAs. His salary increased from Rs 75,000 to Rs 1.5 lakh per month, while ministers’ salaries rose from Rs 60,000 to Rs 1.25 lakh.
MLAs and Members of the Legislative Council (MLCs) saw their salaries double from Rs 40,000 to Rs 80,000. This change is expected to impose an additional financial burden of Rs 62 crore annually on the state exchequer.
In June 2024, the Jharkhand Mukti Morcha (JMM) government arbitrarily increased the salaries of the chief minister, ministers, and MLAs by up to 50%. In 2023, then Delhi CM Arvind Kejriwal approved a massive 136% salary hike for himself, raising his pay to Rs 1.7 lakh per month, while MLAs received a 66% increase, bringing their salaries to Rs 90,000. Sources say that this increase was implemented arbitrarily, with no justification.
In 2023, West Bengal CM Mamata Banerjee also cited pay disparity with other states as justification for increasing MLAs’ salaries by 50%, raising them from Rs 80,000 to Rs 1.2 lakh, while also granting a 36% hike to the chief minister and ministers, bringing their salaries to Rs 1.5 lakh.
In 2018, Kerala chief minister Pinarayi Vijayan decided to hike the salary of MLAs by almost 66%.
In 2016, Telangana, under chief minister K Chandrashekar Rao, gave MLAs and ministers a whopping hike of 163%, making them the highest-paid legislators of the country, with the CM drawing a salary of Rs 4.1 lakh per month, ministers getting Rs 3.5 lakh, and MLAs Rs 2.5 lakh per month.
Similarly, in 2016, the Congress government in Himachal Pradesh approved a hefty 83% salary hike for its leaders despite the state already grappling with a severe debt crisis.
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