No-Confidence Motion & Its Impact

Any long term financial decision can not (or should I say 'should not') be taken without considering the political scenario in the country. So let's try to understand the 'No-Confidence Motion' issue briefly and its impact.

Lok Sabha is composed of representatives elected by direct election. The maximum strength of the House as per the Constitution is 552 (530 elected members to represent the States, upto 20 members to represent the Union Territories and not more than 2 members of the Anglo-Indian Community to be nominated by the Hon'ble President).

The number of seats for different regions and UTs is show below:

What is a no-confidence motion?

A no-confidence motion is a parliamentary motion which can only be moved in the Lok Sabha against the entire council of ministers, stating that they are no longer considered fit to hold positions of responsibility due their failure to carry out their duties or promises.

How it works?

To take up the no-confidence motion in Loksabha, at least 50 MPs would need to stand up and support the move. If there are 50 MPs in favour, the motion is considered valid and the speaker allots a date for discussion on the motion. The Prime Minister or Ministers from ruling party address to the charges made. The motion mover has the right to participate in the debate & reply. After the debate, the speaker puts question to the house and decides the decision of the house by voice vote or a division.

What is the current no-confidence motion issue?

The YSR Congress proposed a no-confidence motion against the ruling NDA government on the issue of granting special category status to Andhra Pradesh. Telugu Desam Party (TDP) which is the NDA ally and has recently moved out of the ruling alliance, has declared support to the motion along with several other opposition parties.

Why BJP/NDA is opposing the motion if it has majority in Loksabha?

The support of various opposition parties for the motion will help to satisfy minimum criteria of 50 members of Parliament supporting the motion. The no-confidence motion will not topple the government even if various opposition parties have decided to support it because BJP is the single biggest party with majority in Loksabha at the moment. But, the motion can be an embarrassing situation for NDA government because the issue of granting special-category status to Andhra Pradesh will be debated at length by various leaders and this can impact the BJP's image ahead of some major state elections and also in the upcoming Lok Sabha elections.

What's in it for us?

For a stock market to function well and give outstanding returns, political stability in the country is very important. Political stability in the country provides power to the government to take decisions related to reforms/infra projects quickly. Any political stability in the country can slow down the economy and might ultimately impact your investments. Therefore, this no-confidence motion is an important event for your personal financial decisions. Track it closely.