The welfare program was started in December 2010 at the same time that major subsidies were eliminated from such goods as bread, gasoline, heating oil, water and electricity.
The concern was that the subsidies—especially on gasoline—went mainly to the wealthy. Electricity subsidies also benefited mainly the wealthy who had air-conditioning and computers and all sorts of gadgets, while the poor commonly have one television and a few bare light bulbs in their homes.
By making the same per capita payment to everyone, the government calculated that the poor would benefit more than the wealthy.
The payment was 455,000 rials a month. After 16 months, that has now been raised by 280,000 rials or 62 percent to 735,000 rials. At the official rate of exchange then and now, the payments are rising from $44 to $60. At the open market rate of exchange prevailing then and now, the payments are falling from $40 to $39 a month.
But none of these are very good measures of purchasing power. The Islamic Republic stopped publishing inflation data last year so there is no good way to measure the post-inflation impact of a 62 percent hike. But based on the last official inflation figures, the cost of living has probably risen in excess of 30 percent over the last 16 months. Still, no one believes the official figures. Actual inflation probably exceeds 40 percent and might exceed 50 percent. So, the payment hike probably does represent a real if modest increase in purchasing power.
Behruz Moradi, the head of the program, said the new monthly payment would be deposited electronically in bank accounts as of April 3.
It isn’t clear where the Ahmadi-nejad Administration found the cash for the payments. The Majlis has not approved any increase.
Majlis Deputy Ahmad Tavakkoli said, “When I heard the news [of the payment hike], I was shocked; I was speechless.”
Deputy Elias Naderan said the Administration proposed a hike and argued for it before the Majlis Economy Committee, of which he is a member. Naderan said the presentation was vague and the government could not convince the committee that the resources for a higher payment were available. Therefore, he said, the committee did not approve any rise in the monthly payment.
Others have said that the shift from subsidies was supposed to be a wash, with the funds saved from subsidies to go to welfare payments. But, in fact, almost everyone outside the government agrees that the government has gone deep in the hole to make the payments.
The Ahmadi-nejad Administration has said it will bring costs down by ceasing to make payments to the wealthiest segment of the population. But the regime decided in 2010 to make equal payments to all because it had no way to figure out who were the rich and who were the poor among the 75 million people.
The government recently started urging the wealthy to voluntarily drop out of the program.
A few weeks ago, a text message was sent to all cellphone told the rich it was time to drop out. After a public outcry, Moradi said the text message had failed to include the word “optional” because the message was limited to 70 characters.
