- Definition: Subsidies are costs incurred by the government through budgetary resources.
- They are for the provision of goods not classified as “public goods”.
- Reasons for Implementation:
- To help the poor by giving various kinds of support.
- To fight inflation and price volatility (e.g., price subsidies).
- To achieve social equity and economic growth.
- To incentivize certain economic activities (e.g., fertilizer subsidy for agriculture).