Salary cut of MLAs, ministers to have negligible impact for state finances: PRS

Six states, including Karnataka, announced reducing the salary and allowances for MLAs and Ministers with much fanfare to augment funds for fighting the Covid-19 pandemic. But an analysis shows that it has "almost negligible impact" on the state’s finances.

According to the analysis, Bihar will save Rs 2.1 crore per year while Uttar Pradesh has the maximum saving of Rs 17.4 crore followed by Karnataka Rs 15.9 crore. Gujarat will be saving Rs 5.8 crore, Himachal Pradesh Rs 4.3 crore and Kerala Rs 3.1 crore respectively.

The total savings through such reductions in salaries and allowances to the total budgeted expenditure range from 0.0001 to 0.0009%, according to the PRS Legislative Research.

Comparing it with the total budgeted expenditure for 2020-21, the savings will be just 0.001% for Bihar while it will be 0.003% each for UP and Gujarat. It will be 0.007% for Karnataka while the impact on Himachal Pradesh's savings will be 0.009% of the total budgeted expenditure. Kerala will be saving 0.002%.

"This shows that such measures to decrease MLA salaries and allowances toward increasing the pool of funds for fighting the pandemic are likely to have an almost negligible impact on the state’s finances," the analysis said.

Besides Karnataka, the other states which reduced the emoluments of their respective MLAs, MLCs, Ministers, Speaker, and Whips were Bihar, Gujarat, Himachal Pradesh, Kerala, and Uttar Pradesh. While Bihar reduced the salaries and allowances by 15%, other states pegged it at 30%.

All the states except Bihar have promulgated ordinances to cut salary. These amendments to the existing salaries and allowances were made for a period of one year and effective from April 1.

It also showed that the basic pay of MLAs across the states before the pay-cuts after the pandemic was less than half of the base salary of a Chief Secretary to a state.

While the salaries of MLAs across states range between Rs 2,000 and Rs 78,800, a Governor is getting Rs 3.5 lakh, a state Chief Election Commissioner Rs 2.5 lakh, a High Court Judge, Chief Secretary and Director General of Police are paid Rs 2.25 lakh each.

The analysis does not include the salary cut for MPs and Central ministers. The Centre had also suspended funding through MPLAS for the next two years.