Economy, Domestic Economy

Cutting Cash Subsidies to Boost Employment, Production

Cutting Cash Subsidies to Boost Employment, ProductionCutting Cash Subsidies to Boost Employment, Production

The ministry of cooperatives, labor and social welfare plans to use the savings from cutting cash subsidies of six million high-income Iranians by the end of the current Iranian year (March 19, 2016) to create employment and boost production, Mehr News Agency quoted deputy minister Seyyed Abolhassan Firouzabadi as saying on Sunday.

He also noted that the ministry's objectives are to increase the scope of the government's 'Food Baskets' scheme – to provide an assortment of groceries to low-income households – and to provide insurance coverage to all Iranians.

As part of the Subsidy Reform Plan, passed by the parliament on January 5, 2010, the government has until recently been paying a sum of 455,000 rials ($13 at market exchange rate) to almost all Iranians on a monthly basis as compensation for cuts in food and energy subsidies. The parliament lowered the cap for the total amount of cash subsidies in the new Iranian year’s budget bill, compelling the government to exclude high earners from the subsidy list.

The 'Food Basket' scheme has been adopted as an alternative to the controversial Subsidy Reform Plan.

"The ministry successfully implemented the scheme four times over the past year and intends to continue the scheme in the current year," said the deputy minister.

Earlier, Minister of Economic Affairs and Finance Ali Tayebnia said while the government has earned around 320 trillion rials ($11.2 billion) in revenues from the increase in energy prices, the payment of cash subsidies alone has amounted to 420 trillion rials ($14.7 billion) in government spending.