Iran: Top 3 Income Deciles to Be Cut From Cash Subsidy List

EghtesadOnline: I ran Cabinet has ratified the implementation of Clause 14 of the Budget Law for the Fiscal 2019-20, which pertains to the "Targeted Subsidies Law".

News ID: ۷۴۷۸۶۱

14 July 2019

The decision has been notified to related bodies, including the Ministry of Economic Affairs and Finance; Energy Ministry; Communications and Information Technology Ministry; Interior Ministry; and Plan and Budget Organization.

As per the directive signed by First Vice President Es’haq Jahangiri, related government bodies have been tasked with identifying and removing households in the top three high-income deciles from the list of monthly cash subsidy receivers by Aug. 10.

The "Targeted Subsidies Law" of 2010 authorized the reduction of subsidies on food and energy carriers and substituted it with the payment of 455,000 rials ($3.5) per month to every Iranian, according to Financial Tribune.

The plan has been retained to date and nearly 76 million or 95.21% of Iranians currently receive the cash subsidy.

The expenditure section of "Targeted Subsidies Law" included in the current year’s budget law allows the payment of 411,000 billion rials ($3.21 billion) to monthly cash subsidies, up to 84,000 billion rials ($657.27 million) in cash payments to reduce absolute poverty and the insurance of women who are the primary breadwinners of households, 49,000 billion rials ($383.41 million) to healthcare and up to 61,450 billion rials ($480.82 million) for the Guaranteed Purchase of Wheat Program.

The average annual inflation gap measured by the Statistical Center of Iran among income deciles increased 0.1% to reach 3% in the Iranian month Khordad (May 22-June 21) compared with the previous month’s 2.9%.

The average goods and services Consumer Price Index in the 12-month period ending June 21 increased by 37.1% for the first decile (those with the lowest income) whereas it rose by 40.2% for the 10th decile (those with the highest income).

The second and third deciles saw their 12-month average inflation rates grow by 38.3% compared with last year’s corresponding period.

The annual inflation rate for the fourth decile increased by 38.2% in the same month, the fifth decile 38.1%, the sixth decile 37.9%, the seventh decile 38.6%, the eighth 38.7% and the ninth decile 39%.

The highest overall CPI (using the Iranian year to March 2017 as the base year) stood at 179.1 for the 10th decile and the lowest index was 173.8 for the first decile.

The year-on-year inflation rates increased by 50.1% for the first decile during the month under review, 51.2% for second, 51% for third, 50.9% for fourth, 50.8% for fifth, 50.4% for sixth, 51.2% for seventh, 51.3% for eighth, 52% for ninth and 53.8% for the 10th decile.

Income deciles are groupings that result from ranking either all households or all people in the ascending order based on income, and then dividing the population into 10 groups, each comprising approximately 10% of the estimated population.