New Government Subsidy Initiative Aims for Targeted Economic Relief and Domestic Production Boost
In a strategic move to refine its social support system, the Iranian government has initiated a new phase of its subsidy program, focusing on redirecting aid to lower-income families while simultaneously bolstering domestic production. The plan, detailed in a note to the national budget for the current Iranian year, represents a significant shift in the administration’s economic policy.
Refining the Recipient List
A key pillar of this new initiative is the precise identification of subsidy recipients. According to a member of the Iranian Parliament’s Planning, Budget, and Calculation Commission, the government is mandated to use the Iranian Welfare Bank system to identify high-income earners, specifically those in the 8th, 9th, and 10th income deciles. The subsidies for this group, comprising an estimated 18 to 20 million people, will be discontinued. This measure is designed to free up financial resources for more targeted distribution.
Prioritizing Low and Middle-Income Families
The parliament has authorized the government to reallocate these resources in the form of commodity vouchers to middle and low-income groups. Given economic fluctuations, currency devaluation, and rising inflation, the government is tasked with providing these vouchers to improve the livelihood conditions of the people. The official, Mr. Zare, emphasized that the priority for receiving these vouchers must be given to the 1st, 2nd, and 3rd income deciles.
Bolstering Domestic Production
A central and distinguishing objective of this new plan is its explicit focus on supporting domestic industries. Instead of using funds to import foreign essential goods, the government is directed to support internal resources for producing food items, agricultural products, and livestock. This approach ensures that basic goods and food supplies are sourced from domestic production, thereby strengthening the national economy.
Learning from Past Challenges
The new initiative comes after the electronic voucher scheme, introduced in 2021, faced operational challenges. These included price incongruity with inflation, insufficient retail infrastructure, and logistical issues. The Speaker of the Parliament, Mohammad Bagher Ghalibaf, recently noted that due to high inflation, the effectiveness of the voucher plan had significantly diminished.
A Shift to Direct Commodity Supply
In response, the execution model is set to change from a voucher-based system to the direct supply of goods at stable, lower prices. A new formula proposed by the Minister of Agriculture would allow families to purchase necessary goods at fixed rates. The government will compensate for the price difference, ensuring a steady supply of essential commodities and providing greater economic stability for consumers.
The Path Forward
The success of this revised support program hinges on meticulous planning and rigorous oversight of the distribution process. The government’s recent actions demonstrate a continuous effort to review and enhance supportive policies, aiming to achieve a more resilient economic framework that directly benefits its citizens and fortifies national production capabilities.