A subsidy or government incentive is a form of financial aid or support extended to an economic sector generally with the aim of promoting economic and social policy. Although commonly extended from the government, the term subsidy can relate to any type of support – for example from NGOs or as implicit subsidies.

What is subsidy with example?

Definition: Subsidy is a transfer of money from the government to an entity. It leads to a fall in the price of the subsidised product. ... It is a part of non-plan expenditure of the government. Major subsidies in India are petroleum subsidy, fertiliser subsidy, food subsidy, interest subsidy, etc.

Is subsidy good or bad?

Subsidies create spillover effects in other economic sectors and industries. A subsidized product sold in the world market lowers the price of the good in other countries. ... While subsidies may provide immediate benefits to an industry, in the long-run they may prove to have unethical, negative effects.