Understanding MPs’ Salary Hike: A 24% Increase Explained

Context:

This analysis details the Indian government’s decision to increase salaries, allowances, and pensions for Members of Parliament (MPs) by 24%, effective from April 1, 2023, as notified by the Ministry of Parliamentary Affairs. The move, announced on March 24, 2025, reflects adjustments to MPs’ financial entitlements, providing insights into legislative governance and economic policy as of March 24, 2025.

1. Salary Increase: MPs’ monthly salary rises from ₹1 lakh to ₹1.24 lakh, a 24% hike, effective retroactively from April 1, 2023, following the Centre’s notification on March 24, 2025.
2. Pension Revision: Pension for former MPs increases from ₹25,000 to ₹31,000 per month, with an additional ₹1,860 (up from ₹1,500) per year of service beyond five years.
3. Allowance Adjustments: Daily allowance during parliamentary sessions jumps from ₹2,000 to ₹2,480; constituency and office allowances also see a 24% rise, though exact figures remain unspecified.
4. Legislative Basis: The hike amends the Salary, Allowances and Pension of Members of Parliament Act, 1954, aligning MPs’ pay with inflation and living costs.
5. Process of Salary Hike:
6. • Initiation: The Finance Ministry proposes adjustments based on economic indices like the Consumer Price Index (CPI), often after stakeholder consultations.
   • Cabinet Approval: The Union Cabinet, chaired by the Prime Minister, approves the draft proposal, finalizing the percentage increase.
   • Parliamentary Nod: Typically, a bill amending the 1954 Act is introduced in Parliament, debated, and passed by both Lok Sabha and Rajya Sabha, though this hike was notified directly via executive order.
   • Notification: The Ministry of Parliamentary Affairs issues a gazette notification (March 24, 2025), making the hike official with retrospective effect.
6. Historical Context: MPs’ salaries were static at ₹16 daily from 1954 until 2001; post-2001 reforms tied increments to economic conditions, with the last major hike in 2018 raising it to ₹1 lakh.
7. Retroactive Arrears: MPs will receive arrears from April 1, 2023, to March 31, 2025, reflecting the delay between effective date and notification.
8. Process Involved: Unlike regular legislation, this hike bypassed full parliamentary debate, leveraging executive authority under the 1954 Act, raising questions about transparency.

Key Terms:

• MPs’ Salary: Monthly pay for Members of Parliament, now ₹1.24 lakh post-hike.
• Pension: Retirement benefit for former MPs, increased to ₹31,000 monthly.
• 1954 Act: Salary, Allowances and Pension of Members of Parliament Act, governing MPs’ pay.
• Consumer Price Index (CPI): Measure of inflation influencing salary adjustments.
• Gazette Notification: Official government announcement enacting the hike.
• Constituency Allowance: Funds for MPs’ local duties, raised by 24%.
• Executive Order: Cabinet-approved directive bypassing full parliamentary vote in this case.

Link To The Original Article – https://www.thehindu.com/news/national/centre-notifies-24-hike-in-salaries-pensions-for-mps/article69368455.ece