Quick Answer: What Are The Types Of Subsidy?

What does the government subsidize?

Government subsidies help an industry by paying for part of the cost of the production of a good or service by offering tax credits or reimbursements or by paying for part of the cost a consumer would pay to purchase a good or service..

How many types of subsidies are there in India?

Social security subsidiesRegionSocial security programBillion RupeePan IndiaTotal subsidy for FY-2013-14 (approx)3,600Pan IndiaFood Security (PDS) (subsidy)1,250Pan IndiaPetroleum (subsidy)970RuralFertilizer (subsidy)6606 more rows

What is subsidy explain?

A subsidy is a benefit given to an individual, business, or institution, usually by the government. … The subsidy is typically given to remove some type of burden, and it is often considered to be in the overall interest of the public, given to promote a social good or an economic policy.

What are some examples of government subsidies?

5 Common Types of Government SubsidiesExport subsidies. An export subsidy is when the government provides financial support to companies for the purpose of exporting goods to sell internationally. … Agriculture subsidies. … Oil subsidies. … Housing subsidies. … Healthcare subsidies.

Does a subsidy have to be paid back?

Grants are sums that usually do not have to be repaid but are to be used for defined purposes. Subsidies, on the other hand, refer to direct contributions, tax breaks and other special assistance that governments provide businesses to offset operating costs over a lengthy time period.

What industries get the most government subsidies?

Key Takeaways. While many industries receive government subsidies, three of the biggest beneficiaries are energy, agriculture, and transportation.

What is an example of a subsidy?

When the government gives a tax break to a corporation who creates jobs in depressed areas, this is an example of a subsidy. When the government gives money to a farmer to plant a specific farm crop, this is an example of a subsidy. … A government grant to a private enterprise considered of benefit to the public.

Is subsidy good or bad?

In short, any subsidy that benefits women, the poor and the marginalised is good; their growth propels national growth. … Similarly, subsidies for loans given for secondary agriculture initiatives reduce the burden on primary agriculture activities, and also help whittle down disguised unemployment in the agri-sector.

Who gets subsidies from the government?

Most subsidies are cash grants or loans that the government gives to businesses. It encourages activities the government wishes to promote. The subsidy depends on the amount of the goods or services provided. One level of government can also give subsidies to another.

What are the effects of subsidies?

The effect of a specific per unit subsidy is to shift the supply curve vertically downwards by the amount of the subsidy. In this case the new supply curve will be parallel to the original. Depending on elasticity of demand, the effect is to reduce price and increase output.

What is subsidy and its types?

Subsidies come in various forms including: direct (cash grants, interest-free loans) and indirect (tax breaks, insurance, low-interest loans, accelerated depreciation, rent rebates). Furthermore, they can be broad or narrow, legal or illegal, ethical or unethical.