GST Formula - The Weighted Vote

By Vijay Kumar

AS per Article 279A of the Constitution of India, the President shall constitute the GST Council which shall make recommendations to the Union and States on the items specified under sub-clause (a) to (h) of clause (4).

As per clause (9), every decision of the GST Council shall be taken at a meeting, by a majority of not less than three fourths of the weighted votes of the members present and voting in accordance with the following principles:

(a) the vote of the Central Government shall have a weightage of one third of the total votes cast, and

(b) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting.

This weighted vote system has been illustrated in the Statement of Objects and Reasons of the Bill as under:

Illustration:

In terms of clause (9) of the proposed article 279A, the "weighted votes of the members present and voting" in favour of a proposal in the Goods and Services Tax Council shall be determined as under: -

If all States present, vote in favour of a proposal and the Centre also supports it, then there is no problem as the total percentage will be - 33.3 ( WC) + 66.7 (WS) = 100%

If all States decide that the RNR should be say 18% and if the Centre does not agree with it, the proposal fails as it gets only 66.67% as against minimum majority of 3/4th or 75%. [0+2/3 x 31/31 = 2/3=66.67%, if 31 States attend and vote.)

Similarly, if Centre wants to impose RNR of 20% and if all the States oppose it, then it will not be passed with 33.3% in favour and 66.7% against. [1/3+2/3 x 0/31 = 1/3 = 33.33%]

Thus, both Centre and States should work together and each cannot unilaterally decide on any issue.

What happens if the States are divided among themselves in respect of a proposal? What is the minimum number of States required to vote in favour of any proposal?

Let us examine. If out of 31 States, 20 States vote in favour, then the WS = = 43%

Now, WT = WC + WS = 33 + 43 = 76% > 75% - The proposal will pass.

Thus, the Centre, in addition to 33.33%, needs a minimum 41.67% from the States' share as WS. Since the States' weighted vote is taken as 66.67% only, the SF/SP ratio should not be less than 62.5% to achieve this 41.67%

Since the quorum required is 50%, assuming minimum 16 States present and participate in voting, for any proposal to pass, at least 62.5% of 16 States, i.e, 10 Members should vote in favour.

On the other hand, if the States want to exercise a kind of VETO (Assuming the scenario where opposition States vote against and ruling party States vote in favour), minimum votes required against the proposal is:

31 x (100-62.5) = 31 x 37.5% = 12.

So, out of 31, if 12 States oppose, a proposal will not get the required majority of 75% or 3/4^th.

Maybe along with the CBEC Chairperson, they should make a statistician a permanent invitee to all the meetings of the GST Council to calculate and report the result of voting.