Liquidity reached 784 trillion rials until September 2005 showing a 14.5-percent growth against the figure for the preceding year.

Justice is a popular concept, which is perhaps why justice-seeking is the essence of almost all schools of thought and divine religions.
Justice, as its web definition suggests, is the quality of being just or fair. It is also referred to the administration of law; the act of determining rights and assigning rewards or punishments.
Justice is a concept involving the fair, moral, and impartial treatment of all persons, especially in law. It is often seen as the continued effort to do what is “right.“
In most cases what one regards as “right“ is determined by consulting the majority, employing logic, or referring to divine authority, in the case of religion. If a person lives under a certain set of laws in a certain country, justice is considered making the person follow the law and be punished if not.
But the concept of justice took a political tune in Iran after President Mahmoud Ahmadinejad was elected to office in June 2005.
Justice-oriented slogans brought the humble president to power. However, it remains to be seen to what extent he will be able to deliver on his promises.

Dialogue
Experts warn that if the ’justice dialogue’ is not backed by operational plans, it becomes a populist manifesto. It will also not be able to serve justice-oriented purposes.
The realization of economic justice requires well-calculated policies and intelligent management. Hence, when the worsening inflation gets in the way of achieving economic justice, controlling inflation will top the agenda of every justice-seeking government.
The Fourth Five-Year Development Plan (2005-2010) has envisaged an average 9.9-percent inflation rate. In order to make the ambitious objective a reality, the Seventh Parliament decided in late 2004 to fix prices of goods and services. The initiative also committed the government to adopt certain mechanisms to reduce consumption of oil derivatives and improve public transport.
However, not only fuel consumption failed to decline, but it also hit record highs. Public transport also remained poor.
This was yet another indication of the failure of merely populist policies.

Inflation
Experts believe that Iran’s economy will not get rid of inflation.
However, the Central Bank of Iran (CBI) governor said earlier that the inflation rate declined to 14.4 percent in the first half of the year to March 2006.
Ebrahim Sheibani said, in a report to President Mahmoud Ahmadinejad, that inflation rate was 15.4 percent in the corresponding period of the previous year.
He further said that liquidity reached 784 trillion rials until September 2005 showing a 14.5-percent growth against the figure for the preceding year.
Experts unanimously agree that liquidity is to blame for high inflation. So how is it possible that inflation declines when there is an increase in the liquidity rate?
A senior lawmaker predicted earlier that Iran’s oil revenues will reach $45 billion in the year to March 2007, underlining, however, that every billion dollars of oil money will increase the inflation rate by one percent.
Kamal Daneshyar, who heads the Parliament
Economic Commission further said that inflation rate will go up by 35 percent, if the government spends much of the oil revenues.

IranÕs oil revenues will reach $45 billion in the year to March 2007.

Structural Problems
A glance at Iran’s contemporary economic history shows that inflation has constantly existed over the past four decades.
In 1960s, inflation rate stood at 1.6 percent. The rate went up to 13.5 percent a decade later, toward the end of which the country experienced a revolution and the start of a devastating war that shook its oil-based economy to the core for eight exhausting years.
Inflation remained at the 13.1 percent level in the 1980s but jumped to 24 percent in the 1990s.
According to the Persian daily Sobh-e Eqtessad, while many world countries have managed to control inflation, Iran has largely failed to do so. This is mainly because Iran’s economy suffers from structural problems, including poor production sector, uncompetitive markets and improper budgeting system.
On the other hand, the government’s debts to the banking system have grown hugely. Budget deficits have also been on the rise in recent years.
Minister of Economic Affairs and Finance Davood Danesh-Jafari said last month that the government’s budget deficit for the year to March 2006 stands at 46 trillion rials, putting to rest earlier estimates that the figure would top 70 trillion rials.
The minister said a portion of the government’s budget deficit is related to its failure to achieve targeted duties from car imports, stressing that the government had predicted that the 100-percent tariff would encourage car imports.
The minister further noted that state companies also failed to economize on their budget in the March-September period.
“Some 10 trillion rials were expected to be earned from the state organization’s savings by March 2006, whereas only 1.2 trillion rials will be set aside in the period,“ he said.
Under certain circumstances when supply remains inadequate due to limitations on production and imports, any increase in demand will worsen the inflation rate.
Hence, an increase in government’s expenses and liquidity growth can exert more pressure on the market and cause inflation to go up further.
Any extra payments by the government will potentially have inflationary consequences.

Urban areas attract rural human resources and at the same time create numerous problems for the community.

Labor migration from rural to urban areas has emerged as a prominent issue in Iran after the victory of the Islamic Revolution in 1979. Before that, the traditional household system had successfully confined the population to the place of birth and rural to urban migration only occurred on an extremely small scale, according to Moj news agency.
However, since the 1980s, a large number of migrants have successfully entered cities without advance planning. Although there is no accurate estimation of the scale of migration, it is commonly believed that hundreds of thousand rural migrants are residing in cities without the necessary facilities and a large proportion of these people are ’circular’ migrants, i.e., they move back and forth frequently.
Migration has invited concerns from academics and hostility from certain officials, the urban public and the media.
How does one explain the dramatic rise in the rate of migration since the late 1980s? What are government policies on migration? What are the current and potential economic and social consequences of the existing government policies? These are the questions that need to be answered as soon as possible.
Unfortunately, the existing system has created and institutionalized the urban bias, which means that the government consistently favors and protects urban people when making policy decisions.
The success of the market economy is greatly aided by labor migration from rural areas. Restricting migration creates serious economic losses. Thanks to economic reforms, no restriction is in place in tying rural people to land and to rural areas. As a result, despite government incentives offered to rural areas, a large number of rural people have been able to and continue to migrate to cities.
As the government does not prohibit the mobility of rural people through migration planning, new migrants can make their own decisions as to when, where and how to move out depending on labor-market conditions and their own preferences. Nevertheless, the decision to migrate is still significantly affected by financial difficulties and economic problems in rural areas. The effects of these factors are manifested in the extraordinary hardship faced by the new rural migrants and the uncertainty about their future in cities. As a result, most migrant workers consider their stay in cities as temporary and very few make plans to settle down permanently. Hence, they are seen as floating population and are never taken into account in official statistics.
Rural migration has negative impacts but it is still positive for the economy. Urban areas attract rural human resources and at the same time create numerous problems for the community.
However, a well-coordinated system in place to support families in rural areas could be the best option for the government at this time. In such a system, the urban sector will act as a support for the rural areas, particularly during the times of circular migration when rural folks find work in the cities.