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Three statistics that our MPs must consider

The salaries of MPs are being tripled, which means a CAGR of 31.6 per cent over their 2006 salary. The MPs are livid, saying it’s not enough. The last time they got a raise, it was four-fold, writes Gautam Chikermane.

columns Updated: Aug 22, 2010 20:37 IST
Gautam Chikermane

As the question of how much our Members of Parliament (MPs) are paid gathers anger, here is a rational look at this phenomenon that best defines the meeting point of politics and money. I’d like to present three statistics.

One, over the past five years, India’s economy has raced ahead by a compounded average growth rate (CAGR) of 8.5 per cent, impressive by any account, particularly in the context of one of the world’s harshest recessions since the Great Depression that barely caused a slowdown in India.

Two, in the same period, the per capita income of its citizens has grown by 6.8 per cent. It stands at R33,540 per annum, Rs 2,795 per month or Rs 93 (about $2) per day. That’s a global rank of 143, after adjusting for purchasing power parity (PPP). Even without taking inequalities into account (as we all know, the distribution of this income is skewed towards a wealthy few), India’s per capita income is lower than poor countries that most of us Geography-advantaged won’t be able to point out on a map — Albania, Tonga, Latvia…

In this context, here is the third statistic: the salaries of MPs are being tripled, which means a CAGR of 31.6 per cent over their 2006 salary. The MPs are livid, saying it’s not enough. The last time they got a raise, it was four-fold (in 2006), so how can they settle for a three-fold rise this time?

Now, let’s put these statistics together. At a time when the Indian economy is growing by 8.5 per cent, its per capita income is rising by 6.8 per cent, MPs are saying that a 31.6 per cent increase in their salary is not enough. We are not talking about other legitimate benefits like the country’s best-located housing, daily allowance and pension (let’s exclude office allowance, constituency allowance or free travel for themselves and their assistants).

We do need to pay our representatives well. In a democracy, they are our sole link to changing aspirations. The question is, how well? They compare their salaries with those of secretaries. Well, secretaries are not allowed to run businesses, MPs are. So, the context of MPs’ salaries needs to be like a consulting assignment. Why then should they get a lifelong pension for serving just five years in Parliament?

Or when they compare them with salaries of MPs in other countries, does high-end housing come embedded in that salary? Have they normalised the income using the PPP formula, under which their Rs 1.45 lakh salary translates into about Rs 6-7 lakh? "This salary (Rs 50,000) is an insult to Parliament," Rashtriya Janata Dal President Lalu Prasad said. I would humbly like to point out, sir, that this monthly salary is 1.5 times the annual income of an average Indian. If R50,000 is an insult, what would you call R2,795, an abomination?

I wonder why our representatives can’t see what the rest of the nation can — their coarse rent-seeking through higher salaries is creating a deep divide between themselves and the people they purport to represent. While they need to be paid fairly, such trade union-like behaviour is obscene when the aam aadmi is facing double-digit inflation and food prices are getting out of bounds for most.

Honourable Members: can you please keep this raise in abeyance till your constituents are better fed, better clothed, better housed? Linking your increments to the well-being of your constituents will bring you far greater long-term dividends.