Terminology - Business:
Subsidy 5 Important Points
From CIEL
(1.) A subsidy is the amount spent by the government
to provide goods and services at prices that are lower than the market rates as
a welfare measure.
(2) Subsidies ensure equitable availability of
essentials to low income groups & encourage higher consumption or
production of certain products.
(3) Subsidies represent a sizeable government
expenditure.
In India, food, fertilizers and fuel subsidies
are estimated at Rs. 2.5 lakh crore per year.
(4) Subsidies can distort both supply and demand.
Producers may be unwilling to increase supply if they are unhappy with the
price the government pays.
(5) Consumers may not adjust behaviour if
subsidies make goods cheaper.
Investment in public transport may have been hurt
by fuel subsidies that help private transport.
Courtesy: Centre for Investment Education and
Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and
Labdhi Mehta.
No comments:
Post a Comment