President Hassan Rouhanis administration has been facing a major dilemma in continuing the subsidy reforms that started in 2010. It was predicted that the cash handout program would be revamped after Rouhanis re-election in May 2017. The changes involve the lifting of subsidies on a variety of things like electricity and water in exchange for monthly cash payments to citizens. To protect the lower income classes and reduce the financial burden on the treasury, the government has had to look for ways to close the income gap.
When Rouhani presented his budget to parliament on Dec. 10, he pointed out thatpoverty eradicationwould be one of his main objectives. One of the tools to achieve this goal was to ensure that the financial resources directly paid out to most Iranian citizens were utilized effectively. In fact, government officials calculated that a continuation of monthly cash payments in the amount of 455,000 rials (about $12.50) per person would only be feasible if the recipients were halved. The budget draft included an allocation of 230 trillion rials ($6.9 billion) to cash handouts, enough for payments to only 42.1 million citizens in the next Iranian year. As of November 2017, 76.3 million Iranians (out of a population of 81 million) were receiving cash handouts and the government was suggesting to cut down the number to 42.1 million next year. For years, the administration had tried and failed to exclude the upper income classes. The administration's plan in the new approach was to concentrate on the lower income classes (workers, civil servants, single-parent households, people registered with the various state welfare organizations). Those who felt wrongly excluded could appeal.
During the parliamentary deliberations, one of the reasons the majority oflawmakers rejectedthe draft budget was the plan to cut cash handouts.
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