President, PM, MPs to Take 30% Pay Cut for 1 Year as Covid-19 Infects Economy; MPLAD Funds Suspended

New Delhi: Prime Minister Narendra Modi, his cabinet ministers and all Members of Parliament will take a 30% salary cut for the next one year, signalling a long road to recovery from the unprecedented economic blow caused by the Covid-19 pandemic.

Along with the PM and lawmakers, President Ram Nath Kovind, Vice-President Venkaiah Naidu and Governors of all states have also voluntarily decided to forgo part of their salaries.

The decision was taken at a Union Cabinet meeting on Monday where an ordinance was approved to reduce the salaries, allowances and pensions of MPs by 30 per cent for one year. The amount will be utilised in the fight against coronavirus, union minister Prakash Javadekar said.

Briefing reporters, the minister said the cabinet approved an ordinance amending the Salary, Allowances and Pension of Members of Parliament Act, 1954 reducing allowances and pension by 30% from April 1 2020 for one year. “The money will go to Consolidated Fund of India,” he added.

The cabinet has also approved temporary suspension of MPLAD (Member of Parliament local Area Development) fund scheme during 2020-21 and 2021-22, and the funds will be used for managing health services and the adverse impact of COVID-19 pandemic in the country, he said. Rs 7,900 crore from the MPLADS scheme will go to Consolidated Fund of India, Mr Javadekar said.

Confirmed cases of Covid-19 in India have risen sharply in the last one week, crossing the 4,000-mark on Monday morning, while 109 people have died so far, according to health ministry data.

The Prime Minister on Monday signalled that the country should brace for a long fight. “It is going to be a long haul, we do not have to tire, our resolve and mission are to emerge victorious in fight against this pandemic," he said in a video message.

Javadekar said that more than the funds raised, the importance of the pay cut was to send the right message. “Charity begins at home,” he said.

While the move to cut salaries has been accepted by all parties, the decision to suspend MPLAD funds, which lawmakers use for development works in their constituencies, has met with some opposition, including from some Congress and Trinamool Congress MPs.

Soon after the decision was announced, Congress leader Shashi Tharoor tweeted that PPE kits for healthcare staff and rapid test kits had been bought from his MPLAD funds just before the government cut them.

He also said there is some disbalance in the way Centre allots funds to states and suggested that all MPs should be allowed to earmark their funds for COVID-19 related expenditure.

Various states, including Maharashtra, Rajasthan, Kerala, Odisha, Telangana and Andhra Pradesh have already decided on salary cuts for ministers and staff for the fight against coronavirus.

The lockdown imposed by the government to control the spread of the virus, along with the weaker global environment are expected to drag down the economic growth further to the worst levels since liberalisation, according to several rating agencies like Fitch, and a recovery could take around three quarters.