Subsidies can be good or bad for economy. It varies on context.
Subsidies can be good or bad for economy. It varies on context.
If the country is generating revenue more than its budget then subsidies is wrong, but if its gross revenue is lower than its cost then subsidy is required. However in second scenario, the country should not bear the cost of the subsidy by taking international fund, as it will be burden on the economy slowly.
Subsidies are motivation to boast activity like agriculture. If government gives farmers subsidies of agricultural inputs, more food production to feed population so plus in economy.
I think in some cases support is bad because it weighs heavily on the person or the state. Support is a form of financial aid or subsidies to an economic sector, institution, business or individuals, with the aim of promoting economic and social policies
absolutely. If the overall productivity improves then it will be distributed among everybody, if the the country's governance is in perfect shape.
Subsidies employed to generate or stimulate moribund areas of an economy, or local industries, work as long as they are limited to a specific number of years. This is how governments should act and which has so far served China well as long as subsidies are economically justified.
Economic support can be good to remove some type of burden .
Government aims to support various sectors to uplift the poor or some start ups or public in the form of subsidy. However there so many leakages in the subsidiary chain which need to be controlled. If the subsidy reach to the targeted beneficiary, then subsidy will help in upliftment of economy for a country like India.
Subsidies are given to boost up the financial condition of the society. It aims to focus specially for weaker section of the mass public. Sometimes, targeted beneficiaries are manipulated by some men in authority which completely dilutes the aims and objectives of subsidy schemes. Likewise in India, we have schemes of BPL (Below Poverty Line) and House Construction Schemes. Many people who do not meet the criteria (poverty, income etc.) also get benefited which means they are depriving the rights of the poor people.
I think it is okay for those who are in need (people) and to protect industry at infant stage.
Limited government interventions are in certain times needed, but the continued fusion of state and economy must be avoided, which always starts with subsidies.
Working Paper The Political Economy of Knowledge Automation
From an economic point of view, we can use subsidies and taxes to correct market failures.
If we wish to discourage something, we should tax it. If we wish to encourage something, we should subsidy it.
It all depends on the wishes of society.
There are good subsidies and bad subsidies. In the same way, there are good taxes and bad taxes.
If we wish to discourage pollution, which is bad, we apply taxes.
If we wish to encourage education, which is good I think, then we apply subsidies.
The correct answer depends on the wishes of society and the policy objectives.
Subsidies require taxes of the productive of society to aid the unproductive of society. Therefore, they discourage the productive people and encourage the productive to continue their wasteful ways. Not only continue but also to reproduce more unproductive behavior.
Such a society can not endure long.
Taxes and subsidies are potential economic instruments for correcting market failures in the system due to positive and negative externalities. This is part of standard economic theory.
In the context of the banking sector, subsidies can be both negative and positive.
They can be positive in the sense that they can prevent insolvencies and a crash of the banking sector. But subsidies also guarantees banks (especially big ones) that they will most likely be backed up by the government in case something goes wrong. This incentives banks to take on more risks (risky loans etc)
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