Japan to Hand Out Cash to People

Japan's parliament has passed legislation to give a cash hand-out to every resident in an attempt to boost the recession-hit economy. People will get at least 12,000 yen ($121) under the $20bn plan. In forex trading Yen has been growing weaker.

There are fears however that most Japanese people, who have a strong tradition of saving, will hang on to the cash instead of spending it. The cash hand-out is the centerpiece of a stimulus package to revive Japan's economy. Japan is in a far sharper recession than the US or Europe.

Japan's GDP had dropped 3.3% in the final quarter of 2008, a much steeper decline than in the US, which saw a 1.6% drop. UK’s economy had contracted by 1.5%.

Critics of the plan say it is a ploy to boost the popularity of Prime Minister Taro Aso and this will only expand Japan's already bulging budget deficit.The legislation enacting the stimulus plan has been mired in Japan's parliament for weeks. In a political battle sort of, the bill was passed after the government-controlled lower house overruled a no vote in the upper house, which is dominated by the opposition.

Japan has been one of the first countries in Asia to be hit by the global meltdown and lead the recession into the continent.