During Prime Minister Narendra’s Modi’s first term, some MPs went to meet him with a request to hike their salaries. Sources said they were strongly snubbed in the closed-door meeting which took place in Parliament.
In 2016, it was Prime Minister Modi’s strong view that MPs should not decide their pay package and decisions on such matters should either be taken by a body like the pay commission or that it be linked to hikes given to certain posts and ranks from time to time.
It was based on this strong view that the salary revision mechanism for MPs was 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 notification, issued on March 24, 2025, revises the monthly salary of MPs from Rs 1 lakh to Rs 1.24 lakh, with effect from April 1, 2023.
The recent notification from the Ministry of Parliamentary Affairs, announcing a 24% increase in the salaries, allowances, and pensions of Members of Parliament and former MPs, may have given rise to some misconceptions among the people. But Prime Minister Modi’s approach is ample evidence that the decision is pragmatic and not arbitrary.
Mechanism behind salary revisions
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 depoliticize the process and introduce a systematic mechanism for salary adjustments.
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.
However, some MPs, including Mulayam Singh Yadav and Lalu Prasad Yadav, argued that the increase was insufficient and demanded at least a five-fold rise in salaries.
Automatic salary adjustments based on inflation
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%.
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-19
As an extraordinary measure during the pandemic, the government implemented a 30% salary reduction for MPs and ministers in April 2020 for a duration of one year.
The 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.
The criticism surrounding the hike stems largely from misconceptions rather than an understanding of the structured process that governs MPs' remuneration.
Arbitrary hikes in some states
Many state governments continue to follow an arbitrary and ad hoc mechanism for deciding their own salaries, granting themselves extraordinarily high hikes.
This stands in contrast to the structured, inflation-linked mechanism for MPs' salaries that Parliament adopted at the urging of Prime Minister Narendra Modi.
Case in point: Salary hike in Cong-led Karnataka govt
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, which is already heavily indebted due to the Congress government's indiscriminate spending.
With allowances included, their total monthly income will now increase from Rs 3 lakh to Rs 5 lakh, resulting in a direct hike of Rs 2 lakh in take-home pay. This massive hike that Siddaramaiah gifted to himself comes at a time when his government has imposed hikes in petrol prices, milk prices, property tax, and water tax, further burdening the poor and middle class.
Salary hikes in other opposition-ruled states
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, 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.
This increase was implemented arbitrarily, with no justification. More alarmingly, it came after Kejriwal's 2015 demand for an almost 300% hike in MPs' salaries was rejected by the Modi government on the grounds that it was exorbitant.
In 2023, West Bengal CM Mamata Banerjee 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.
Instead of addressing the growing development disparity between West Bengal and other states, she focused on the salary disparity between legislators in West Bengal and other states.
In 2018, Kerala chief minister decided to hike the salary of MLAs by almost 66% citing increase in prices of electricity, diesel, and petrol!
In 2016, Telangana under CM K Chandrashekara Rao gave MLAs and minister a whopping hike of 163% making them the highest paid legislators of the country with CM drawing salary of 4.1 Lakh per month, ministers getting 3.5 lakhs and MLAs getting 2.5 lakhs 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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