Social Dimentions of Targetization of Subsidies

Subsidies have been subject of various discussions in recent years mainly due to their sensitivity in Iranian economy. It is often claimed that this moral obligation has been appropriated by rich minority and or subsidies has been mismanaged in the country. In this paper we discuss various concepts and critically evaluate subsidirzation policy in practice and compare them with the stated aims and objectives. While acknowledging the critical necessity of maintaining the real value of wages and salaries and the compensation for losing purchasing power of wages earners, we shall discuss the impact of inflationary pressures on quality of life, psychological stability and comfort and its implication for Social capital, keeping the real value of social insurance and retirement funds. We shall analyse these policies in relation to budget estimate of the year 1385 (2006).