ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -It is the amount of money provided by government to firms in the form of cash, grants or tax breaks as an incentive to help reduce production costs which can then be passed on to customers as lower prices, and this can encourage consumption.

Detailed explanation-2: -What Is a Government Subsidy? Government subsidies are financial grants extended by the government to private institutions or other public entities, in order to stimulate economic activity or promote activities that are in the public good.

Detailed explanation-3: -A government subsidy is a cash payment or tax break given to a business or institution to help lessen a burden or give an economic boost to a struggling sector or corporation.

Detailed explanation-4: -For example, if a government sends monetary assistance that reimburses 15% of all health expenditures to a group that is paying 15% income tax. Exactly the same subsidy is achieved by giving a health tax deduction. Tax subsidies are also known as tax expenditures. Tax breaks are often considered to be a subsidy.