Impact of Targeted Subsidies Implementation on Poverty and Instability of Rural Household Economy in Iran (Case study: Villages of Neishabour county)

Authors

• Majid Hamzehi ¹
• Aliakbar Anabestani ²
• Jafar Javan ³

¹ 1- Ph.D. Candidate in Geography & Rural Planning, Ferdowsi University of Mashhad, Mashhad, Iran.

² Professor in Department of Human Geography & Spatial Planning, Shahid Beheshti University, Tehran, Iran.

³ Professor in Department of Geography, Ferdowsi University of Mashhad, Mashhad, Iran.

10.30495/jzpm.2022.4284

Abstract

Implementing subsidies targeting policy in Iran is one of the measures aimed at reducing poverty, reducing the class gap between different deciles of society and especially improving economic indicators in rural areas. The present study aimed to evaluate the effects of subsidizing targeting on poverty and instability of rural households. This research is a fundamental exploratory and descriptive-analytical research. The required data were collected through both field and document methods. In this study, first, the research indices in two 6-year periods, before subsidizing targeting (2005-2010) and 6-year period after subsidizing targeting (2011-2016), were studied in all villages of the country and the average of each The index was compared before and after the targeting of subsidies and then the results of this section were compared with those of field research in the sample studied. The statistical sample of this study consisted of 22 villages of Neyshabur villages were selected by systematic random sampling using Cochran formula. The results of the study showed that the implementation of targeted subsidies has, in the first place, raised inflation rates and in some years even surpassed rural inflation over urban inflation. It has also led to changes in the composition of household expenditures, changes in the composition of household food expenditures and non-food household expenditures. But the implementation of the plan, because of the high rate of household benefit from the project, ultimately increased household income and also created a new source of income for rural households. But the implementation of the plan, because of the high rate of household benefit from the project, ultimately increased household income and also created a new source of income for rural households.
Extended abstract
1- Introduction
After the implementation of the targeted subsidy plan, one of the strata concerned, the villagers, was announced. As far as the history of this research is concerned, wherever the government emphasizes the need to reduce the number of subsidy recipients, villagers, nomads, people covered by support institutions such as the Relief and Welfare Committee, pensioners and retirees have always been exempted from this rule. Over time, the effects of this plan became apparent at various levels of the rural economy. In September 2013, the Statistics Center of Iran reported that inflation in rural areas had surpassed urban inflation for the first time. 41.4% of rural inflation versus 39% of urban inflation is what some have called unprecedented in recent years, and some have compared it to inflation in 1952-56. Therefore, it is necessary to compare the goals of this great economic plan, which is to reduce poverty, with the results of its implementation. Based on this, the present study has been conducted in order to answer this question: What effect has the implementation of the targeted subsidy plan had on the distribution of poverty and the economy of rural households?
2- Methodology
In this study, in order to investigate the impact of the implementation of targeted subsidies law on poverty and instability of rural households, first the research indicators using data of household expenditure and income plan data during two periods of 6 years before targeted subsidies (2005-2009) and 6 years after Subsidy targeting (2011-2016) has been studied at the level of all villages in the country and the average of each index in the pre- and post-subsidy period has been compared and then the results obtained from this section have been compared with field research in the sample. . The statistical population in the field survey of 22 villages is among the total villages with more than 20 households in Neishabour county and were randomly selected.
3- Result & Discussion
The findings of this study on the growth index of rural inflation and its predominance of urban inflation (increased inflation in the transportation sector, food, non-food costs, water and electricity and gas, agriculture and production), indicate that in the national dimension, The inflation rate curve has become steep after the targeted subsidies and has been completely to the detriment of the villagers. Regarding the index of change in the composition of household expenses, the results of this study indicate a significant change in the rural household economy after the targeted implementation of subsidies. Thus, the non-food expenditures of rural households in the case study case, with a small difference compared to food expenditures, constitute a larger volume of annual household expenditures. Regarding the index of change in the composition of household food expenditures, although the food expenditures of rural households in the country constitute a larger volume of total household expenditures, the food basket of rural households has become simpler and less economical after the implementation of targeted subsidies law. In the case model section, the results show that the weight classification of food consumption in the household food expenditure portfolio is consistent with the findings of the whole country in the period after the targeted subsidies. The findings of this study in the Index of Non-Food Costs of the Household Index show that we have seen an increase in Kurdish spending in all non-food consumption groups. This is consistent with the findings of a case study.
The average income for the six-year period after targeted subsidies for a rural household has increased by 63.14 percent. Targeting subsidies across the country. Regarding the household interest rate index of the project, the results show that, first of all, the total number of rural subsidized people has decreased from 22 million in 2009 to 19 million in 2016, which is due to the decrease in population in rural areas. Secondly, in total, during the seven years of cash subsidy deposit, 25% of the total amount of subsidy deposit has been the share of rural households. Regarding the index of creating a new source of income in rural households, in 2011, about 29% of the income of a rural household was provided through cash subsidies. This effect has become less and less in the following years, until finally in 2016, about 11% of the household income was cash subsidies. Also, on average, in the 5-year period before the targeted subsidies, about 16 percent of a rural household's income was provided through targeted subsidies. However, the results of a case study show that cash subsidies account for about 6.1% of their annual income.
4-Conclusion
Based on the above and in response to the research question (What effect has the implementation of the targeted subsidy plan had on the distribution of poverty and the economy of rural households?), It has been concluded that after the targeted implementation of subsidies for 4 indicators in the macro dimension of rural villages And in the case of a case in point, the situation has worsened, but in the case of two indicators, we have seen an improvement. Also, the results of a survey on an index indicate that the results do not match in the national dimension and the case study. Finally, it should be noted that the distribution of subsidies in cash and in the same way for all villages does not meet the basic objectives of the plan. Therefore, even if there is an insistence on the distribution of subsidies in cash, it is suggested that the government increase subsidies for low-income and high-income deciles. Paying public subsidies and then investing in manufacturing sectors can stimulate production and improve the employment rate. In the field of research, due to the spread of poverty and inequality in rural areas, it is suggested that the issue of poverty and its effects and its causes and consequences be once again considered by researchers in rural studies.

Keywords

• Subsidy Targeting
• Poverty
• Rural Household Economics Instability
• Iran

20.1001.1.22516735.1401.12.45.6.4

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