Iran Announces Major Expansion of Essential Goods Subsidy to Support Middle-Income Families
Tehran – In a significant move to bolster household economic resilience, the Iranian government has announced a substantial expansion of its essential goods subsidy program, now extending coverage to middle-income families up to the eighth decile.
Seyed Kamel Taghvinejad, Secretary of the Government Board, confirmed the new support package, marking a notable shift from the initial plan which targeted only the first four income deciles. This decision reflects the government’s responsive approach to current economic conditions, aiming to provide a broader safety net for a larger segment of the population. While the full details of the package are yet to be released, the expansion signals a prioritized effort to stabilize living standards.
A Tool for Economic and Social Stability
The subsidy program, often referred to as the “Goods Coupon” or “Fajraneh” plan, is viewed not merely as direct aid but as a strategic instrument for managing broader economic and social stability. The Minister of Economy has previously indicated that such support mechanisms are also part of the strategy to mitigate potential economic repercussions. In an environment of potential financial fluctuations, possessing a flexible tool for rapid intervention in household livelihoods is considered critically important.
A Policy’s Evolution and Immediate Impact
The subsidy initiative first launched in December 2022 to support low-income strata. It has since undergone several revisions, including the addition of incentive bonuses, to adapt to rising inflation and a sharp decline in purchasing power. After a ten-month hiatus, the program was revived in March 2024 using resources from the National Development Fund.
The fifth phase of the program is slated for implementation in the coming week. According to published information, for the upcoming phase expected by the end of autumn, individuals in the first to third income deciles will receive 500,000 Tomans, while those in the fourth to seventh deciles will receive 350,000 Tomans. These credits will be deposited to the household head’s subsidy card for the purchase of specified essential goods from contracted stores.
Addressing a Deepening Need
Analysis of household expenditures reveals that even the fifth and sixth deciles spend a large portion of their income on food. The recent inflationary surges have led to reduced consumption of protein, dairy, and legumes among middle-income groups, raising concerns about long-term public health consequences. Experts had strongly emphasized the necessity of including these middle deciles, advice the government has now acted upon. The erosion of purchasing power is no longer confined to the poorest, with the middle class also facing intense pressure.
The Challenge of Sustainability
The primary question surrounding this ambitious expansion is the sustainability of its funding. Implementing the program for just the first three deciles requires approximately 14 trillion Tomans per phase, with costs multiplying for the expanded coverage to the seventh decile. While initial phases were financed through the National Development Fund and budget allocations, economic experts caution that continuing without a stable, defined revenue source could disrupt regular implementation, exacerbate budget deficits, and fuel inflation.
A Necessary Measure for National Cohesion
Despite the financial challenges, the importance of continuing this supportive policy is widely acknowledged. The current economic climate has placed additional strain on households. The cessation of such programs in the past has led to public distrust and reduced the effectiveness of support policies. Therefore, the government is compelled to design a mechanism for its regular continuity, even with limited resources.
Data confirms that nearly all population deciles, except for a small segment of the highest earners, are affected by economic shocks. This situation underscores that policies like the essential goods subsidy are vital not only for the poor but also for maintaining the livelihood stability of the middle class. Supporting these groups is essential to prevent them from falling below the poverty line, a scenario that would carry significant social and economic consequences for the nation.