ALL ABOUT SUBSIDY

Subsidy-  A subsidy is a sum of money granted by the government or public body to help industries or businesses keep the price of commodities or services low.

Why Governments Introduce Subsidies?

Governments introduce subsidies to:

1. Support low-income households by making essential goods and services affordable.

2. Promote economic growth by stimulating industries, creating jobs, and increasing production.

3. Control prices to prevent inflation or ensure affordability.

4. Encourage sustainable practices by supporting environmentally friendly behaviors.

Types of Subsidies

Various subsidies include:

1. Food subsidy (e.g., food stamps)

2. Energy subsidy (e.g., cheap electricity)

3. Agricultural subsidy (e.g., farm support)

4. Education subsidy (e.g., free or low-cost education)

5. Healthcare subsidy (e.g., affordable medical care)

Case Study: Solar Energy Subsidy in India

The Indian government offers subsidies on solar energy:

- INR 30,000 on 1 KW

- INR 60,000 on 2 KW

- INR 78,000 on 3 KW

This central government subsidy applies to all states. The subsidy amount is deducted from the customer's total purchase amount.

Additional State Subsidies

States also offer various subsidies on commodities like food, education, energy etc

Subsidies play a crucial role in supporting low-income households, promoting economic growth, controlling prices, and encouraging sustainable practices. 

Governments worldwide use subsidies to achieve social, economic, and environmental goals. 

By understanding subsidies and their applications, individuals and businesses can benefit from government initiatives and contribute to a more equitable and sustainable society.