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Debt-Ridden Telangana Gets 400 Percent MLA Pay Hike Approved

The Telangana government’s current debt has crossed Rs 1.3 lakh crore.

Updated
India
2 min read
If pay hike passes, legislators will receive over Rs 4,00,000/month. (Photo: iStockphoto)

The Telangana Assembly has passed a Bill which allows a huge 400 percent hike in legislators’ salaries. This hike means that legislators will receive salaries of over Rs 4,00,000 per month as opposed to Rs 96,000 currently.

Despite its heavy debt burden, the Telangana government is now scouting different sources to borrow more funds. According to The Times of India, the list of bankers includes the Rabobank of Netherlands.

The government’s debt stands at over Rs 1.3 lakh crore.
This includes Rs 83,846 crore public debt, accumulated over the past two years and Rs 60,000 crore, which the new state received when it was formed in 2014.

The bulk of the borrowed amount will go towards hiking salaries of MLAs and MLCs by as much as 400 percent. The rest – as is standard procedure – will go to ministers and CM K Chandrashekhar Rao himself.

The pay hike for legislators as Members’ Amenity Committee (MAC) is headed by Assembly Speaker S Madhusudana Chary.

MAC is set to meet on Monday to discuss the hike proposal.

The government was obliged to hike salaries owing to a long-pending demand from legislators. And the special fund for the chief minister and ministers is also justified.
M Mahmood Ali, Deputy Chief Minister, Telangana
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Snapshot

Sources of External Borrowing:

  • Rabobank
  • New Development Bank of BRICS
  • Japan Internationa Cooperation Agency (JICA)
  • National Bank for Agriculture and Rural Development (NABARD)
  • Housing and Urban Development Bank (HUDCO)
The new Bill will give legislators a salary of over Rs 4,00,000/month.
Their current salary is Rs 96,000/month.

This hike in pay will now result in over Rs 100 crore additional burden on the exchequer, as beneficiaries of the hike include ex-legislators and widowers of former lawmakers receiving government pension.

Currently under the CM’s special development fund, Rs 4,765 crore has been budgeted.
Rs 25 crore has been allotted to all 18 ministers.

Additionally, Rs 5,255 crore is required by the government’s largess and Rs 52,000 crore is needed for flagship schemes of Mission Bhagiratha and free two-bedroom houses for the poor.

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Experts however say this external borrowing is against the law.

The state government cannot borrow beyond Rs 14,500 crore, according to the Fiscal responsibility and Budget Management (FRBM) norms. If the government is projecting these numbers, then it means either it is not serious about its proposals or it is going to use the borrowed money within the allowed limit to hike salaries for MLAs, and the special development funds created for the CM and ministers.
BDA Satya Babu Bose, Director, Budget Centre and Governance Accountability

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