preview

Advantages Of Subsidies

Better Essays
Open Document

Objectives
Subsidies, by means of creating a difference between consumer prices and producer costs, brings change in demand/ supply decisions. Subsidies are often aimed at :
1. inducing higher consumption / production.
2. achieving social policy objectives including redistribution of income, population control, etc.
3. offsetting market imperfections including internalisation of externalities;
TRANSFERS AND SUBSIDIES

Transfers which are straight income supplements are different from subsidies. An unconditional transfer to an individual would add to his income and would be distributed over the entire range of his expenditures. A subsidy however relates to a particular good, the relative price of which has been lowered because of the subsidy …show more content…

It is the richer farmers who may derive relatively larger benefits because of their capacity to use these allied inputs.
• Subsidies to elementary education form about half of the total subsidies on general education. However, this is not true for all individual States: the share of elementary education is lowest in the high income States and the highest in the low income States (Goa, Punjab and West Bengal actually give higher subsidies to secondary education than primary education).A negative correlation between the level of per capita income and the share of subsidies to elementary education is thus discernible. Most subsidies to higher education accrue predominantly to the better-off sections of society as they have an overwhelming advantage in competing out prospective candidates from the poorer sections in getting admission to courses that are characterised by scarcity of seats.
• For subsidies of health, the greater emphasis on curative health care expenditure often reflects a bias towards the better-off people whereas preventive health care expenditure with much larger externalities would clearly be of greater help to the economically weaker sections of the society.
AGENDA FOR

Get Access