
Prediction of elimination of subsidies for millions of people in the 97 budget bill / Delbar Tavakoli
“Right-aligned image”
Delbar Tavakoli
Many believe that the nationwide protests in Iran during the month of Dey this year are solely due to the economic problems of the people; it has even been heard in some places that they called it the “egg protests”. If we assume that the only reason for the people’s protests is indeed economic issues, the government and parliament must seriously reconsider some of their decisions in the 97 budget bill.
One of the controversial issues in the 1397 budget bill is the removal of cash subsidies for more than 33 million people. According to Ali Asghar Yousefnejad, spokesperson for the reconciliation commission, the 1397 budget bill currently provides subsidies for 76 million and 317,593 people in the country, which is an increase of about one million people compared to last year.
How subsidies enter people’s lives.
In fact, targeting subsidies is one of the foundations that was established from the first day of Mahmoud Ahmadinejad’s presidency. It is a legacy of the ninth government, which has now been seized by the twelfth government in a way to unravel this blind knot. The ninth government justified the elimination of government subsidies on fuel, food, water, electricity, and other items by claiming that targeting subsidies and instead providing cash subsidies to low-income groups would create economic balance in society. The law on targeting subsidies was implemented on December 19, 2010.
The law that is referred to as the largest economic plan in Iran’s history, but according to official statistics from the Ministry of Economy and Finance of Iran, the first phase of this plan faced failure and pushed more households below the poverty line.
In the overall plan of targeted subsidy, it was predicted that within a period of five years, subsidies for goods such as gasoline, diesel, gas, oil, electricity, water, wheat, sugar, rice, oil, and milk would be eliminated and they would be supplied at the market prices of the Persian Gulf region.
It was also predicted that the Iranian government could earn 20 trillion tomans from the increase in prices, and half of this income could be distributed among the people in cash to combat inflation. However, we see that we have reached the end of the five-year period and not only was there no distribution of income to combat inflation among the people, but we are also witnessing the dollar rate reaching over 4000 tomans from 1226 tomans. Even the price of eggs has skyrocketed to the point where people cannot afford them.
Payment of subsidies in the budget bill.
97.
The decision to eliminate nearly half of the subsidy recipients in the 97 budget proposal was met with both support and opposition. According to reports from inside the country, with the presentation of the 97 budget proposal to the Islamic Consultative Assembly, it was revealed that the government has reduced the budget for targeted subsidies by approximately 11 billion tomans. In the 97 budget proposal, the net amount resulting from the targeting of subsidies is estimated at 37 trillion tomans, while this figure was 48 trillion tomans in the current year. Therefore, it is necessary to remove some individuals from the current list of subsidy recipients in order to achieve a balance between the amount of payments and these figures.
The discussion of changing the mechanism of subsidy payments and removing high-income households from the targeted subsidy program has been raised since the beginning, but only about 4 million people have been removed from the subsidy list in the past years and so far no resources from this sector have been allocated to production and low-income households. Now, the twelfth government claims that in the 97 budget bill, the path of cash subsidy payments has been changed towards needy households.
According to Mehrdad Lahooti, a member of the Parliament’s Planning and Budget Commission, under the targeted subsidy law, 50% of the targeted subsidy income should go to the people, 30% to production, and 20% to the government. However, in previous years, the law was not followed and we witnessed the government allocating 35 trillion tomans from the targeted subsidy income to cash subsidies and 11 to 12 trillion tomans from the general budget to cash subsidies. He believes that by removing high-income individuals from receiving subsidies, we can prevent the government from spending 12 trillion tomans from the general budget on cash subsidies and use this amount for development projects.
On the other hand, Hamidreza Hajibabaee, a member of the Parliament’s Planning and Budget Commission, has a different opinion; he believes that according to the 2018 budget plan, five tenths of the society will be excluded from receiving subsidies and this not only does not eliminate poverty in the country, but also destroys the poor. Hajibabaee recently raised an unanswered question, saying, “We gave people’s money in the targeting of subsidies, but it is not clear where the share of production and 20% for employees went!”
According to the member of the Parliament’s Planning and Budget Commission, it has been mentioned in the budget bill that if someone wants to receive subsidies, they must go and stand in line. This is while previously, these subsidies were deposited into individuals’ bank accounts.
Which group of people in the year…
97.
They receive subsidies.
The results of the latest sessions in the Organization of Planning and Budget indicate that the government, in the budget for the year 1397, provides subsidies to 4.7 million individuals who are beneficiaries of the Imam Khomeini Relief Committee – including 3.9 million regular recipients and 800,000 case-by-case and back-up beneficiaries. The government also provides subsidies to approximately 3.6 million beneficiaries under the coverage of the Welfare Organization – including 1.3 million regular recipients and 2.3 million case-by-case and back-up beneficiaries. In addition, subsidies are provided to 500,000 female heads of households and to individuals living in districts with coefficients of 6, 7, 8, 9 – which are determined based on the level of deprivation and poverty in rural areas – which includes approximately 8 million individuals in 1598 districts across the country. Subsidies are also provided to 1 million patients with special and incurable conditions.
In addition, subsidies are paid to groups covered by social security insurance, which includes approximately 11 million people. This number includes 5.3 million insured construction workers, 3.25 million intercity drivers, 1.15 million carpet weavers, 710,000 fishermen, 250,000 students, 90,000 mosque servants, 280,000 porters, 1 million nomads, and 4.8 million retirees with salaries less than 1 million tomans, as well as individuals under contract and approximately 2.95 million needy individuals who also receive cash subsidies. According to Jafarzadeh Emam Abadi, a member of the Parliament’s Planning, Budget, and Calculations Commission, with this new bill, approximately 34.5 million people will be removed from the list of subsidy recipients in the country.
Elimination of cash bread subsidy in the year.
97.
Bread is one of the most important food items in the household basket, which in recent years has not been affected by other price increases and its rate has had an upward trend contrary to its quality. According to the latest government decision, in government bakeries, the cheapest bread starts at 240 tomans and can go up to more than a thousand tomans. In previous years, the government had two separate rows for bread in budget bills, namely “cash bread subsidy” and “bread subsidy”. Based on this, in the 96 budget bill for the whole country, the government had allocated 2,300 billion tomans for the cash bread subsidy row and 8,200 billion tomans for the bread subsidy row. This is while in the 97 budget bill, the government removed the rows for bread subsidy and cash bread subsidy from the budget tables and in clause 14 of the budget, allocated 3,300 billion tomans for bread subsidy and guaranteed purchase of wheat, of
What do the citizens say?
Ahmad Bahrami, 32 years old, one of the citizens who receives subsidies, said about the peace line: “The declared poverty line by the Central Bank and the Ministry of Economy and Finance is very different from the real and tangible poverty in society. The price of lamb meat per kilogram is 40 to 50 thousand tomans, rice per kilogram is 10 thousand tomans, and bread is 1000 tomans. These are just the basic necessities of the people, but a standard life that includes travel, quality and good medical expenses, and clothing has become a dream for the majority of society. Now, how do the gentlemen want to define “low income” for receiving subsidies, I do not know. Even the amount they are paying now, 45,500 tomans per person, does not alleviate our pain.”
Narges Bahari, the head of the household, said: “A worker who earns one million tomans cannot even afford to feed themselves and pay rent; let alone cover other necessities of life. I wish the government would create employment opportunities and pay us our overdue wages, and provide us with subsidies.”
Sousan Aliabadi is a second-year mathematics student. In agreement with the statements of Ahmad Bahrami and Narges Bahari in a conversation about peace, she said: “My father suffers from kidney disease, health insurance rates have been cut off in pharmacies and laboratories, and only low-quality government centers accept health insurance, but they also do not perform many tests. I wish the government had not implemented the targeted subsidy plan from the beginning, because prices have become more expensive every day and the subsidies are not enough to cover the rising costs. Using the excuse of removing subsidies, they have continuously increased the prices of water, electricity, gas, and gasoline. I think the government, due to budget shortages and some emptying of the government’s treasury, has turned a blind eye to its own income from the people.”
It was not unexpected that Gholamreza Asghari, the head of the Food and Drug Administration, announced that the amount of drug subsidies in the 1397 budget bill has not changed compared to 1396, and remains at 1600 billion tomans. However, we expected this figure to increase in line with the inflation rate.
Final words.
It seems that removing high-income individuals from the list of subsidy recipients and only providing subsidies to those in need is considered one of the main goals of targeted subsidies. But are only wealthy individuals being excluded from this list, or will this new bill once again target vulnerable segments of society?

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