While 57 members of the YSRC voted in favour of the motion, 97 voted against it, Deputy Speaker Mandali Buddha Prasad announced after a head count of the MLAs was taken.
The YSRC moved the motion alleging that the Speaker was acting in a partisan manner and trying to stifle the opposition. The party wanted removal of Rao as the Speaker.
YSRC members Kotamreddy Sridhar Reddy and others spoke in favour of the motion while Bandaru Satyanarayana Murthy, Pitani Satyanarayana and others from the TDP opposed it.
Soon after the motion was defeated, the Speaker returned to the House to preside over the proceedings. He thanked the House for reposing faith in him.
"I was certainly pained a bit by the opposition party and its leader's decision to move the no-confidence motion against me. But I will always be thankful to the YSRC for having elected me unanimously (in 2014)," the Speaker said.
He assured the House that he would discharge his duties impartially and to the best of his capabilities.
Earlier, the YSRC lost its plot for second day in a row by admitting that it moved the no-confidence motion in order to get eight of its MLAs, who crossed over to the ruling Telugu Desam, disqualified.
The YSRC, which gave a notice this morning for moving the no-confidence motion, however, failed to execute its plans, as the House consented to immediately take up the motion for discussion.
Leader of Opposition Y S Jaganmohan Reddy cited Rule 71 of the House' business rules and wanted the discussion on the motion taken up only after 14 days so as to enable them to issue a whip to all its MLAs.
He said issuing a whip to members was a party affair that has no connection with the House.
As the resolution was adopted by a voice vote, the House took up the discussion on the no-confidence motion.
Yesterday, a no-confidence motion moved by YSRC against the 21-month-old Chandrababu Naidu-led coalition government was defeated by a voice vote.
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