In this article, we will know what is a Subsidy. Subsidies often run the risk of being stolen or have other unintended consequences. In many countries, subsidies are started to help a class, but over time criminal systems arise to steal it. There was systematic theft of ration in India’s ration distribution system for decades.
What is a Subsidy
A subsidy is a certain amount of financial assistance given by the government for the production or import-export of a commodity. Subsidies are direct or indirect. Examples of indirect subsidies are direct subsidies on concessional amounts of goods and concessions on low-rate transportation of export goods on government railways.
Subsidy is financial assistance given to promote an economic or social policy. It is usually given by the government to individuals, companies or institutions. Subsidies can take many forms, such as direct payment, tax exemption, interest-free loan, etc.
Subsidies have been the norm since the seventeenth century. Use of privileges to promote colonization in other countries, temptation of soldiers, encourage population growth, extermination of wild animals, etc. It is found to be done for various reasons.
Subsidies are credited with the rapid development of railways in the United States. Subsidies were widely used in European countries to stimulate sugar production and exports. In India, subsidies are increasingly being used as a way to stabilize commodity prices.