Virendra Pandit
New Delhi: Even as the fresh strain of COVID-19 spread through half-a-dozen countries in the last few days, the US Congress approved a humongous USD 900 billion packages on Monday to assuage market sentiments across geographies, a day after bourses tanked in many nations following reports of new restrictions imposed in Britain, South Africa, and elsewhere.
The measure came in the nick of time as the world markets, which suffered grievously through much of 2020, had begun to gasp for breath again following the fresh strain in the UK. In particular, European and Indian markets suffered and quickly suspended flights and other interaction with Britain.
The impact was felt immediately on Tuesday as relieved markets reacted positively. In India, Sensex jumped 400 points and touched the 46,000-mark while IT and pharma stocks rallied.
The fresh US legislation is massive in world history. At over 5,500 pages, it is “the longest bill in memory and probably ever”, media reported.
After months of discussions, the Congressional leaders thrashed out the hold-all legislation that blends the USD 900 billion (Rs.66,48,345 crore) pandemic aid with a USD 1.4 trillion (Rs. 103,43,410 crore) spending bill and other unfinished legislation on taxes, energy, education, and healthcare, a month before President-elect Joe Biden moves into White House.
As both the House of Representatives and the Senate have cleared the bill, outgoing President Donald Trump is expected to sign the bill into law shortly.
The package will enable direct benefits for jobless Americans below a threshold income level, and support businesses and unemployment programs. In the absence of this urgent bill, a number of COVID-19 relief programs were set to expire in December-end and about 12 million Americans risked losing access to benefits.
The stimulus includes USD 600 payments to most Americans and their kids, and supplement unemployment payments of USD 300 per week, beginning next week. However, it would exclude those with incomes of USD 100,000 per annum as also undocumented immigrants.
The aid will also include funds for transportation, vaccine distribution, schools, universities, farmers, and food aid, including USD 15 billion for airlines.
It also contains over USD 300 billion in support for companies, alongside funds for vaccine distribution and rental aid.
The payment is half the amount that the US Congress approved for direct payments during the first round of pandemic relief earlier this year.
The spending bill was proposed months ago. Many wondered whether delays in its clearing could shut down the government. Since the commencement of the US federal government’s fiscal year in October, America has been operating on temporary funding.
This is important as the USD 2.4 trillion economic relief package has been credited with cushioning the US economy from the impact of the pandemic.
The Lower House (House of Representatives) passed the bill with a 359-53 vote and the Upper House (Senate) with a 92-6 vote.
The overall bill, totaling USD 2.3 trillion, is the second-largest economic stimulus-cum-relief measure in US history after the USD 1.8 trillion Cares Act passed in March 2020 when COVID-19 began to thrash the American economy, alarming the world.
The stimulus, economists believe, is likely to avert a double-dip recession in 2021. It could add nearly 1.5 percentage points to annualized real GDP growth in the first quarter of 2021 and 2.5 percentage points to the calendar year 2021’s growth.