MPs in India are underpaid

Rediff article, How much does an MP earn?, describes the compensation scheme for MPs in India:

And, here are some more less-known facts about the Indian lawmaker: On paper, the salary of an MP in India is Rs 144,000 per year (about $3,200), which works out to just Rs 12,000 (about $266) per month.

But it is meagre only if you don't consider the numerous allowances and freebies an MP is entitled to. Here is a look at the allowances and perks that every MP -- India has 790 of them -- enjoys.

Each Indian MP gets:

    * Rs 14,000 (about $311) for office expenses every month, which includes Rs 3,000 for stationary items, Rs 1,000 on franking of letters and Rs 10,000 for secretariat services.
    * A monthly constituency allowance of Rs 10,000.
    * A daily allowance of Rs 500 when Parliament is in session. Parliament has three sessions every year. The Budget Session (February to May), Monsoon session (July to September), and Winter session (November and December).
    * A daily travel allowance of Rs 8 per kilometre.
    * Each MP and his spouse or companion are entitled to unlimited, free, first class railway travel anywhere in the country.
    * They can also travel anywhere in India -- with a spouse or companion -- 40 times by air free of cost every year, business class.
    * An MP gets a sprawling bungalow in the heart of New Delhi for which he pays a rent of just Rs 2,000 (about $44) per month.
    * Each MP gets near-free electricity of 50,000 units every year. And free water.
    * The MP's bungalow is furnished -- with air conditioners, refrigerators and television sets -- free of cost. Maintenance of the house -- including washing of sofa covers and curtains -- is done free of cost by the government.
    * MPs are entitled to three phone lines and 170,000 free local calls every year.
    * When an MP travels abroad officially, he is entitled to free business class air tickets. He is also paid a daily travelling allowance, which varies depending upon the country being visited.
    * Most medical expenses of MPs are taken care of by the Contributory Health Service Scheme of the Union government.
    * Each MP also gets Rs 20 million (about $434,782) each year from the Members of Parliament Local Area Development Fund. But the MP does not get the money directly. Instead, it is transferred to respective district headquarters where projects are being implemented.
    * After an MP completes a term in office, he is entitled to pension. The basic monthly pension amount is Rs 3,000 (about $66). But it goes up according to the number of years an MP has served in Parliament.
    * The Comptroller and Auditor General of India last year alleged that many MPs have violated norms in the usage of this money.

The wages (Rs 12000 per month) and pension (Rs 3,000 per month) are ridiculous.
The article also confuses compensation paid to the MPs and amount given to MPs for doing their jobs. The fully furnished accomodation is given in Delhi during their term. But how does this enable a MP to own a house after the term is over? Also, if his/her family lives outside Delhi, they will have to move to Delhi to take advantage of the housing. I don't think this really helps MPs much in their personal capacity.  Medical expenses  are paid by the Govt. only during their term. Unlimited free travel by rail and air is also available but only during the term. The constituency allowance and local area development fund is also for spending on the constituency and not for personal use. Besides, free travel, phone, electricity and other perks cannot be sold in the market for cash. How can then MPs take care of educating their kids, purchasing house, retirement savings, and so on? Getting elected requires tremendous amount of time, efforts and money. That means, they will have to neglect their jobs or businesses for many years before they can hope to get elected. Plus, it is difficult to rejoin their job or businesses after their term is over.
Thus, I believe that compensation is extremely inadequate. If we hope to have honest and talented legislatures we better make sure that incentives are right.

Comments

[Ashish Hanwadikar]

"If I am a MP, and assuming the only reason I am in legislature is self interest, I can earn crores by subverting law for venal purposes. What is more I can create distorted laws to open more avenues of corruption."

If you are a MP and getting paid lakhs of rupees per month as salary then only few will risk getting caught in a corruption scandal. Also, remember better people will be attracted to the politics when incentives are right. That means, more obstacles for corrupt people to indulge in corruption. Right now, everybody is corrupt, so it is easy to gettogether. When the right incentive attract honest people to the politics and beaurocracy, few corrupt people cannot indulge in the outright corruption for the fear of getting caught.

But you are right, the corruption might shift from outright scandals to the regulatory and law-making process, the way it is in the US. And such kind of corruption is difficult to prove. For that, we need citizenry who believe strongly in individual rights and limited government. Barring that, different constituencies will fund their favorite representives to distort laws in their favor.

[Gaurav]

Ashish,

Under present structure of government, I do not think that any incentive will be sufficient.

Reason , too much tempation,

If I am a MP, and assuming the only reason I am in legislature is self interest, I can earn crores by subverting law for venal purposes. What is more I can create distorted laws to open more avenues of corruption.

Strong Law and Order and greater transparency will be a dis-incentive ofcourse but I am sure that it will be breached ultimately , reason Greed is most powerful.

Better solution will be devaluation and decentralization of goverment. This will make the representatives less powerful and less avenues of corruption.

Also I think that Politics solely based on monetary gain/self interest is not necessarily the best system or sustainable , however it will be better than
altruism or what goes for altruism.

Regards

PS I am a novice in Economics ,so my reasoning might be wide off the mark.