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What is subsidy, how many types are there, know which subsidy you can take


You must have heard some person uttering the word subsidy at some point or the other. After hearing the word, this thought comes in our mind, what is this subsidy word? Along with this, questions also arise in our mind, who gives this subsidy, why gives it and for what reason? Today we will tell you about some of your questions through this article. If you want to get all kinds of information about it (subsidy), then definitely read this important article of ours.


What is subsidy? (subsidy or subsidies)

Subsidy means the financial help received by the government. With this, in other words, would like to tell that the benefit received by the government to an institution, business or person is also called subsidy, this subsidy is usually given to a person in the form of tax or tax deduction.

For what reasons is the subsidy provided?

The main objective of this subsidy given by the government is to reduce the economic burden on the common people. Most of the subsidies given by the government are used to help the small scale sector, and often this subsidy is used to promote social and economic policies. If there is a loss in any business sector, then the government provides them assistance through subsidy. Sometimes the prices of things like our LPG gas increase, then the government provides help to the people through subsidy, by doing this the government tries to reduce the increased price of these things.

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How is the subsidy distributed and what is the process?

The Government of India distributes the subsidy to us in two different forms, such as: – Direct and Indirect. The financial assistance given by the government in the form of cash is called direct subsidy, on the contrary, the subsidy given by the government through tax exemption, less interest in the loan taken for itself, etc. is called indirect subsidy.

How is subsidy calculated?

To decide the subsidy, the government has to take into account many facts, then it has to be calculated accordingly, such as the amount of loan taken, interest rate, total cost, production and works related to the government. The government decides the amount of subsidy to be given through a certain formula by adding up all the expenditure to be incurred.

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What are the types of subsidy ,

There are many types of subsidies, out of which we have described some important subsidies in this way which are given below:-

  • Production Subsidy:- Production subsidy means an economic benefit given on the production of a product. Production subsidy is that which is given on a particular production of a product. Sometimes the government provides necessary subsidies in the production of a particular product, so that the production of that product is more and more and more people can be benefitted in the production of that product. So that more and more people can come forward and encourage in that production area.
  • Employment Subsidy:- Sometimes the government also provides subsidy in the field of employment, the main purpose of this subsidy is to make the country free from unemployment. This employment subsidy given by the government is to encourage industrialists to try to give new employment opportunities.
  • Transport Subsidy:- The government provides government subsidies so that the sector of government transport can be promoted. The main objective of providing this subsidy is that pollution can be reduced so that those people who use their private vehicles can use more and more government transport instead of their private vehicle.
  • Tax Subsidy :- The main purpose of tax subsidy given by the government is to give tax exemption. There are many main purposes of doing this, such as to promote any kind of industries or to create more and more job opportunities through any type of industry etc.
  • Religious Subsidy:- Not only this, apart from this, our government also gives subsidy for religious areas, this subsidy is provided by the government to the travelers by traveling to the pilgrimage sites of their country, the main purpose of doing this is, that their expenses on any passengers. Do not carry excessive load.

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In which types of areas subsidies are provided by the Government of India? ,

Every country of the world provides subsidy keeping in mind its economic condition, on the basis of this the Government of India also provides subsidy on many things of the country, which are as follows:-

  • Subsidy for Food Industry:- The government also provides subsidies for food industries, so that they can do business of food industries in a better and better way. This subsidy is given for some businesses such as milk, fish farming, poultry and fruits, and many such small industries are provided.
  • Fertilizer Subsidy:- Most of the farmers in our country are individuals, that’s why our country is called an agricultural country, but small farmers incur a lot of cost in cultivating, farmers have to use fertilizers for a good crop, and today’s inflation The price of fertilizers has become very high during this period. Keeping these expenses of the farmers in mind, the Government of India does some help to buy fertilizers, the Government of India does this through subsidies, so that farmers can do farming at low prices for fertilizers such as: – Urea and others. Buy different types of fertilizers.
  • Subsidy on food items:- The Government of India provides this type of subsidy to the poor families living below the poverty line. In this type of subsidy, the government helps such people financially by providing subsidies on basic food items like rice, flour, sugar.
  • Haj Travel Subsidy :- Apart from Hindu people, Muslim religions are also present in large quantities in our country. The way people do pilgrimage in Hinduism, similarly people in Muslim religion perform Hajj. The Government of India also provides subsidy to Haj pilgrims, so that they can make their Haj journey easier through this subsidy. Haj pilgrims have to incur exorbitant expenses on performing Haj and almost everyone is not able to perform Haj pilgrimage, keeping these things in mind, the Government of India provides a necessary subsidy every year for Haj pilgrims. By taking advantage of the subsidy, the Haj pilgrims who are unable to perform Haj also complete their journey successfully.
  • Fuel Subsidy :- As you all know fuels such as: – LPG gas, kerosene, diesel etc. are used, with the passage of time its value is also increasing. Due to the increase in the price of these things, poor people are unable to buy it. Keeping these things in mind, the Government of India provides fuel subsidy to the poor people. Due to which they are able to make their living easily.
  • Textile Industry Subsidy :- As you all know, the clothes in our India are made by silk threads, and silk threads are made from jute, cotton etc. Nowadays people prefer to use silk made clothes, but due to the high cost, the trader has to invest a lot in setting up business in this area, so if the government provides subsidy in this area, then Such traders have to invest less.
  • Subsidy for small scale industries:- There are many people in our country, who are unemployed, to such people, the Government of India provides them the necessary subsidies to start their own self-employment so that they can become self-reliant, due to which all small businessmen get their tax exemption.

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Disadvantages of Subsidy ,

The main purpose of the subsidy given by the government is to provide assistance to the poor people, all the expenditure of the subsidy given in our country is provided by the tax paid by many people of the country. Considering all these things, some unresolved questions start arising in our mind, such as: – What can be the disadvantages or advantages of subsidy, let us try to know about some disadvantages of subsidy.

  • Instead of the needy, someone else can benefit , The government provides many types of subsidies, sometimes it happens that the needy does not get his subsidy, some other person gets the subsidy and instead of the needy, that person gets the benefit.
  • The rich also get subsidy :- In any country, both the rich and the poor people live and sometimes the subsidy given by the government benefits both the poor and the rich. If we talk about the benefit of the subsidy given to the poor people, it is true, but on the contrary, the benefit of the subsidy given to the rich people is undesirable. Such as: – In our country, the subsidy of LPG gas distributed by the Government of India is available to all the people, some of whom are strong from economic status, they also get the benefit.
  • Inadequate utilization of subsidy:- The government of our country also provides necessary subsidies in the areas of small scale industries. So that even in such areas people become successful by starting their own industry and unemployment can be eradicated. While there are benefits, it is not necessary that the subsidies provided by the government are being properly utilized in the areas of small scale industries. If we understand for example, if the government is providing subsidy to 100 people in the field of small scale industries, then it is not necessary that all the people can be successful, out of which only 80 to 85% of the people are successful in such industries. We find that this approach also leads to the loss of such subsidies.
  • Excess load :- The subsidies in India are met by the taxes levied by the residents of the country. In such a situation, the burden of tax increases on those who have to do it.
  • Product shortfall:- Due to the subsidy given in the product being produced in the country, the price of the product decreases significantly, due to the decrease in the price of the product, its demand increases more, by doing so, there is a situation of shortage of that product in our country. it happens. In this way also, through subsidy, some losses are added to the product.

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benefits of subsidies ,

It was told above that subsidies have some disadvantages and advantages, some of the advantages are as follows. Benefit also reaches the people of weaker section through subsidy :-

  • Farmers get benefits :- Most of the population of India does agriculture, in this they suffer losses such as: – Fertilizer cost, seed cost etc. In such a situation, to help the farmers, the Government of India provides food subsidy, which greatly reduces the burden of their expenditure. The government helps farmers a lot in buying seeds, fertilizers, etc. by using subsidies.
  • Efforts to reduce unemployment:- As you mentioned above, the Government of India helps a lot in reducing unemployment in our country through employment subsidy and tax subsidy. The Government of India creates new employment opportunities by providing subsidies to large industries, through all these subsidies, the Government of India has been successful in reducing most of the rising unemployment in the country. The government of our country also gives opportunity to all the young entrepreneurs to promote employment by providing necessary subsidies to them in the field of small scale industries.

As we have known, subsidy is available in many areas and there are other advantages of getting it but it can also have some disadvantages. Due to getting subsidies, people get the necessary help in many work areas and by getting financial assistance, they also get an opportunity to promote employment.


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