Third Subsidy Grant Program Rejected

EghtesadOnline: The Guardians Council–a watchdog that ensures laws are in line with the Constitution and Sharia–rejected on Saturday the Iranian Parliament’s so-called “supply of essential goods to households” proposal, also known as the “third subsidy grant program”.

News ID: ۷۵۱۴۸۹

16 November 2020

According to Abbasali Kadkhodaei, the council spokesman, the plan violates Article 75 of Iran’s Constitution because the government has declined to bear its financial burden, IRNA reported.

Article 75 reads: “The Islamic Consultative Assembly [the parliament] members' drafts, proposals and amendments to government bills proposed by members that entail the reduction of the public income or the increase of public expenditure may be introduced in the assembly only if the means for compensating the decrease or increase in income are also specified.”

The parliamentarian had tasked the government with monthly payments of 1.2 million rials ($4.4) to 20 million people who belong to the three lowest income deciles and were not covered by any humanitarian and welfare organization, and 600,000 rials ($2.2) to 40 million people of modest means of other income deciles over the second half of the current fiscal year (Sept. 22, 2020-March 20, 2021).

According to Jabbar Kouchakinejad, a member of Majlis Plan and Budget Commission, the budget set for the plan stands at 300 trillion rials ($1.1 billion) for six months.

“If the current economic situation persists, the payments must continue into the next year,” he was quoted as saying by ILNA.

It is a few months now that the parliament is flirting with the legislation despite the government’s repeated assertions that it lacks the resources to carry out such plans. However, the parliament said the government is allowed to tap into revenues by selling its properties to implement the plan.

The Iranian government now carries out two income grant plans: the Targeted Subsidies Law of 2010 that authorized the reduction of food and energy subsidies, and instead allowed the payment of 455,000 rials ($1.68) to each and every Iranian on a monthly basis. The plan has been retained so far and more than 95% of Iranians currently receive the monthly cash subsidy.

Moreover, cash transfer to people as compensation for higher gasoline prices introduced last year, known as the Livelihood Assistance Program, are being handed out to 60 million people as well. The government claims to be paying 324,000 billion rials ($1.2 billion) to 18 million households (60 million people) since the gasoline price reform was implemented on Nov. 15, 2019, based on which fuel was rationed and prices rose by at least 50%.

Many families claim that they have not received this allowance.

Cash aid was set at 550,000 rials ($2) for one-person households, 1.03 million rials ($3.8) for two-person families, 1.38 million rials ($5.1) for three-person households, 1.72 million rials ($6.3) for four-person households and 2.05 million rials ($7.5) for households with five or more persons.

The first payment to people under the Livelihood Assistance Program was made on Nov. 19, 2019.  Twelve payments have been made to the people so far.

With an average monthly payment of 27,000 billion rials ($100 million), a total of 324,000 billion rials ($1.2 billion) have been paid up until now.