Positive Impacts
- Help poor households fight inflation and price volatility.
- Can ensure availability of essential commodities at fair prices.
- Can incentivize production of certain goods (e.g., MSP for farmers).
- Can promote social equity and welfare (e.g., health, education subsidies).
- Can support specific sectors for economic growth.
Negative Impacts
- Regressive: Richer households may benefit more than poor ones (e.g., electricity subsidy).
- Distort Markets: Can lead to inefficient resource allocation (e.g., MSP distorting cropping patterns).
- Leakages: Prone to diversion and waste of government resources (e.g., fertilizer diversion).
- Fiscal Burden: Can impose significant costs on government budgets.
- Inefficiency: Can reduce incentives for efficiency among producers.