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What are subsidies? Subsidies are the money the government gives to the public or corporates for selling essential goods and services at cheaper rates. Simply put, it is the opposite of taxation. There are two different kinds of subsidies – growth oriented and welfare oriented. Reduction in fuel and food costs is an example of welfare-oriented subsidies. The government also sometimes gives money to companies or farmers for operating in certain industries. These are examples of growth-oriented subsidies. These subsidies encourage companies to operate in industries that may have high business costs, but are still important for the public and the economy. The oil marketing industry is the best example of this. These companies sell fuel at cheaper rates, incurring a loss. Yet, fuel plays a very important role in the economy. So, to encourage companies to operate in this environment, the government pays them subsidies to make up for the loss.
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Aditya Trading Solutions Pvt Ltd
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