Title: Iran’s Subsidy System Undergoes Strategic Overhaul to Enhance Welfare Targeting
Introduction
In a significant move to refine its extensive social welfare system, the Islamic Republic of Iran is advancing a major transformation of its subsidy framework. The dual-pronged strategy focuses on the precise removal of cash subsidies from higher-income households and a comprehensive redesign of the electronic coupon system for essential goods, aiming to optimize resource allocation and bolster support for eligible citizens.
Phasing Out Subsidies for Higher-Income Groups
In accordance with the national budget law, the government is rigorously implementing the removal of cash subsidies from the top three income deciles (8th to 10th). This initiative, designed to direct resources more effectively, has already seen approximately 8 million individuals from non-eligible households removed from the subsidy roster. Official projections indicate this number will reach 10 million by late October and ultimately rise to a total of 18 million by the end of the current Iranian year.
The identification process for these higher-income groups is based on a sophisticated analysis of six key indicators: total household income, monthly banking transactions, real estate assets, ownership of luxury vehicles, international travel history, and periods of residence abroad. A specific monthly income threshold has been established to guide this process.
Public Response and Process Accuracy
Despite the scale of the removals, public objections have been notably limited. Officials report that around 180,000 appeals have been registered, of which only 5 to 8 percent were upheld after review. This low appeal and acceptance rate underscores the precision and data-driven approach of the identification mechanism. The Minister of Welfare has highlighted that a mere 5% of those removed have formally contested the decision, reflecting a high degree of accuracy in the government’s targeting.
A Revamped Electronic Coupon System
Simultaneously, the government is undertaking a strategic redesign of the electronic coupon system, which will introduce three key changes to enhance its efficiency and impact:
- Expanded Institutional Involvement: New ministries and government bodies, including the Ministry of Agriculture-Jahad, will be integrated into the program’s execution to streamline operations and ensure smoother implementation.
- Price Stability for Essential Goods: A core component of the redesign is a commitment to providing goods on the coupon list at stable, fixed prices. This measure is intended to protect the purchasing power of consumers and ensure predictable access to essential items.
- Diversification of Goods: The range of available goods will be expanded with the addition of four new items: turkey meat, quail meat, fish, and shrimp. This expansion brings the total number of subsidized goods to 15, offering beneficiaries greater variety and nutritional options.
Finalizing the Implementation
The final stages of the electronic coupon redesign are currently underway, with high-level coordination meetings taking place between various government bodies and the parliament. A conclusive session, to be chaired by the First Vice President, is expected to formally ratify and announce the new framework for the program, marking the next phase in Iran’s ongoing efforts to strengthen its social safety net.