Earlier, the government had agreed to hike the basic salary of MPs to Rs 50,000 a month from Rs 16,000, but it led to commotion and adjournment of Parliament last week. MPs want their compensation to be higher than the highest-paid government officerthe cabinet secretary receives Rs 80,000 a month. The MPs demand was reinforced by a joint parliamentary committee.
As per the new decision, taken by the Cabinet on Monday, office and constituency allowances will increase by Rs 5,000 per month each. These tax-exempt allowances would now be Rs 45,000 a month each. According to government officials, the proposal to raise the allowances was moved by finance minister Pranab Mukherjee, who had met leaders from the main political parties on August 21 to find a middle ground.
Leader of the Opposition in Rajya Sabha Arun Jaitley, SP supremo Mulayam Singh Yadav, RJD chief Lalu Prasad and JD(U) president Sharad Yadav, who pressed for a hike in the salaries of MPs to Rs 80,001, had attended the August 21 meeting. BJP deputy leader in the Lok Sabha Gopinath Munde left the decision to Mukherjee.
After the fresh hike, MPs will receive Rs 50,000 as basic salary, Rs 45,000 as office expenses and Rs 45,000 as constituency allowance. The limit for interest-free loan for buying a personal vehicle has been hiked four-fold to Rs 4 lakh from the present Rs 1 lakh. The government also approved a hike in road mileage rate for vehicles used by MPs from Rs 13 per km to Rs 16 per km.