Efforts by the government to uplift six million impoverished people in the country under a plan that was submitted to the Majlis in the last Iranian year that ended in March, seem to be stumbling due to the weak government finances following the plunge in oil prices and other economic constraints.
Based on a directive issued by the Majlis Integration Commission on May 1 this year, the Ministry of Economy was tasked to allocate financial resources, and the Ministry of Cooperatives, Labor and Social Welfare was put in charge of executing the plan within a year after it is passed by the Majlis and becomes law.
The Imam Khomeini Relief Committee (IKRC) and the State Welfare Organization were also directed to provide a framework to identify the needy within six months and present a list to the government for final approval.
The plan envisages assisting the targeted group by drawing on the funds from the cash subsidy scheme. A couple of million people (2.4 million) from the affluent strata, who were receiving the cash payments under the scheme since 2010, have now been removed from its purview by the government and the funds are expected to be diverted to the needy under the new scheme.
Once it takes effect, the heads of the identified families will receive on a monthly basis an amount equal to 20% of the minimum wage plus 10% for each member of the family, including spouse and children. There will be an additional 10% in case the family has a disabled child, local media reported.
President Hassan Rouhani’s government since its election in 2013 has tried and failed to drop the rich from the controversial cash subsidy program. Close to 73 million are still benefitting from the monthly cash subsidies as they believe that they are paid for from oil export earnings and say it is their “inherent right”. Under the scheme, Iranians every month receive $12.8, about 6.7% of the minimum monthly wage.
Feasible Solution
Parviz Fattah, head of the IKRC said the most feasible solution for the new plan (for the impoverished) to become effective is to include it in the next economic development plan (2016-2021).
Mohammad Vahdati, member of the Majlis Social Commission, stressed that the authorities must pay due attention to the plight of the deprived people.
“In addition to social support, they need permanent financial assistance so that they can afford a decent life,” he said, adding that the doles they currently receive hardly meet their basic needs.
He also maintained that the best way to help the underprivileged is to remove wealthy families from the cash subsidy list and give that money to the needy.
“This will help provide a monthly allowance amounting to the minimum salary paid by the Social Security Organization,” he said.
The Subsidy Reform Plan was introduced by former president Mahmoud Ahmadinejad and passed by the parliament on January 5, 2010.
As per the original plan, heavy subsidies on food and energy were removed and instead all Iranians were each paid 450,000 rials ($12.8) on a monthly basis. According to latest government data, the cash subsidy bill now amounts to a massive $1.1 billion a year -- a burden seasoned politicians and respected economists insist the government and the sanctions-hit economy can ill afford.
