Name: Harpreet Kaur
Country: India

Year: 2023
Volume: Volume-10, Issue-1 (January-June)
Page Number: 1-8

The word subsidy is derived from the Latin word subsidium, meaning “troops stationed in reserve”, and
literally implies ‘coming to assistance from behind’ Subsidy means grants. This grant may be in the
form of either cash or kind and is generally given to promote an economic policy or social policy.
Subsidy leads to the fall in the price of the subsidised product. Lower price of the product increases the
demand of the subsidised product and hence affect the market. Subsidies are one of the quintessential
attributes of any welfare state. The subsidy is given to fulfil the objectives to promote social welfare
through food subsidy, subsidizing electric vehicles, solar equipments, education loans, kerosene, oil
subsidy etc., to encourage economic activity by inducing higher consumption as well as production,
Offsetting market imperfection, achievement of social policy objectives including redistribution of
income, population control etc., to promote eco-friendly technologies like solar energy, electric vehicles
which may not be able to create its market due to higher upfront cost and competition.