Indian Government Officials Take Big Pay Cuts As Country Reels From Coronavirus Lockdown

The president, prime minister, vice president, cabinet ministers, governors and all members of parliament in India have voluntarily agreed to take a 30% pay cut for one year, effective April 1, in order to express solidarity with the country’s economy which is reeling from a coronavirus-related lockdown.

Allowances and pensions will also be reduced by a similar amount.

Information and Broadcasting Minister Prakash Javadekar said on Monday that the saved cash from lower salaries, as well as a two-year suspension of an MP local area development scheme, or MPLADS, will go into the Consolidated Fund of India, a government account.

“This is a landmark decision that sends the right signals,” Javadekar said. “Charity begins at home.”

Opposition MPs generally praised the salary reductions.

“This is the least we can do to help fellow citizens in this difficult time,” said Ahmed Patel, an MP from the Congress Party.

Congress MP Shashi Tharoor tweeted: "[The] decision to cut salaries [and] pensions of MPs is welcome. It's a good way for us to show solidarity [with] people suffering across the country.”

But Tharoor and others criticized the suspension of the MPLADS program.

"MPLADS funds are not personal funds of MPs. This is for aiding people during natural calamities of or to fight diseases like COVID-19," said Congress Party member Randeep Surjewala.

Various provincial governments have already enacted salary cuts and other measures to fight against the economic impact of the coronavirus.

Last week, the government of Kerala in the south agreed to cut one month’s salary of all its staffers in order to raise funds for the state disaster relief fund. B.S. Yediyurappa, the chief minister of Karnataka, another southern province, relinquished his entire year’s salary in order to donate that amount to efforts in fighting the virus.

Telangana, Andhra Pradesh, Odisha and Rajasthan have also unveiled salary cuts for its government employees, with reductions dependent upon rank.

In Telangana, the Chief Minister K. Chandrashekar Rao and his cabinet took a hefty 75% cut in their wages.

Maharashtra, which has one of the highest rates of virus infection in India, has decided to distribute the salaries of its state workers in instalments.

However, some unions and opposition Congress lawmakers at the state level have opposed the mandatory pay reductions.

“We will welcome the salary challenge [where government workers are encouraged to donate to relief charities] but mandatory salary cuts will be opposed," said Ramesh Chennithala, Kerala's opposition leader from Congress.

Meanwhile, Prime Minister Narendra Modi warned that the pandemic will continue to hurt the economy, which was already slowing down prior to the emergence of the virus.

"It is going to be a long haul, we do not have to tire, our resolve and mission are to emerge victorious in [the] fight against this pandemic," the Prime Minster told party workers.

As for the lockdown, Javedkar said: "We are monitoring the world situation every minute. A decision will be taken in [the] national interest. A decision in this regard will be declared at the right time.”

As of Monday, India reported 4,067 coronavirus cases and 109 deaths – numbers far below the figures found in Europe and U.S.

Separately, government officials have asked employers not to lay off workers or slap unpaid leaves during the lockdown.

For example, the Labour and Employment Ministry wrote to Ajay Singh, chairman and managing director of Spicejet to refrain from job cuts after the airline enacted 10% to 30% pay cuts in March. Airline employees had complained of the actions to local government agencies.

But even after the lockdown ends, the outlook for job security in India remains bleak.

More than half (52%) of 200 of India’s top corporate executives anticipate widespread job cuts by companies in their industries after the lockdown is lifted, according to a poll by The Confederation of Indian Industry, or CII.

"About 52% of the CEOs anticipate job losses in their respective sectors post-lockdown -- 47% of the firms expect up to 15% job losses and another 32% expected 15% to 30% job losses," said the CII survey.

The survey also found that many companies are stuck with a mountain of unsold inventory.

"About 64% (of inventory) is expected to be cleared in less than 30 days. However, demand will not hold good for the next 30 days and beyond," CII said.

Most firms also expect their revenues to drop by more than 10% and profits to decline more than 5% in the fourth quarter of fiscal 2020 and the first quarter of fiscal 2021.

"The sudden imposition of the lockdown has significantly impacted industry operations and the uncertainty of a recovery threatens substantial loss of livelihoods going forward," said CII Director General Chandrajit Banerjee.