What Is Direct Subsidy Upsc?

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What are direct subsidies?

Direct subsidies are those that involve an actual payment of funds toward a particular individual, group, or industry. Indirect subsidies are those that do not hold a predetermined monetary value or involve actual cash outlays.

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What is direct and indirect farm subsidies?

Direct subsidy usually implies any monetary aid provided by the government to the farmers, while the indirect subsidy refers to the non-cash benefit provided by the government for example concession in fertilizer rates, relaxation in interest rates in crop loans, etc.

What is an example of an indirect subsidy?

Indirect Subsidies They usually include activities that lead to price reduction for goods and services. Hence, the savings arising out of the decrease in prices works as monetary help. Some of the notable examples are tax breaks, insurance, rent rebates, low-interest loans, etc.

What are the four types of subsidy?

Export subsidies. An export subsidy is when the government provides financial support to companies for the purpose of exporting goods to sell internationally. Agriculture subsidies. Oil subsidies. Housing subsidies. Healthcare subsidies.

How many types of subsidy are there?

There are different types of subsidies offered by the government; some of them are: Food Subsidy. Education Subsidy. Export/Import Subsidy.

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What is indirect farm subsidies UPSC?

Indirect Farm Subsidies Indirect subsidies are those subsidies in which the cost of the product is set at a lower price than the market price. India spends roughly 2% of GDP on indirect subsidies. Examples: Irrigation subsidy, Power subsidy, Fertilizer subsidy, Credit subsidy, MSP(Minimum Support Price), etc.

Is MSP and indirect subsidy?

Indirect subsidies are those in which the product’s cost is fixed at a lower price than the market price. Indirect subsidies account for about 2% of India’s GDP. Irrigation subsidies, power subsidies, fertiliser subsidies, credit subsidies, MSP (Minimum Support Price), etc. are examples of indirect subsidies.

What is the difference between indirect tax and subsidy?

Indirect taxes raise the market price while subsidies lower it.

What is an implicit subsidy?

Implicit subsidy here is defined as the expected return of a financial contract over and above the risk-free equilibrium rate and its conventional risk premium in an efficient market.

What are two forms of subsidies?

Subsidies come in various forms including: direct (cash grants, interest-free loans) and indirect (tax breaks, insurance, low-interest loans, accelerated depreciation, rent rebates). Furthermore, they can be broad or narrow, legal or illegal, ethical or unethical.