Different Types of Subsidy
There are many different types of subsidies, and we’ve included some of the more prominent ones below:
1. Fertilizer Subsidies:
The majority of farmers in our country are small farmers, which is why our country is known as an agricultural country. However, small farmers incur a lot of costs in cultivating, and farmers must use fertilizers for a good crop, which has become very expensive in today’s inflationary environment. Keeping the farmers’ expenditures in mind, the Government of India provides some assistance in the purchase of fertilizers through subsidies, allowing farmers to farm at affordable rates for fertilizers such as urea and others. Purchase a variety of fertilizers. This subsidy is offered for various businesses, such as milk, fish farming, poultry, and fruits, as well as many other small businesses. The food processing business can now get a subsidy from the central government of up to Rs. 5.00 crore.
2. Food Subsidy:
The Indian government gives this form of assistance to needy families living below the poverty line. Subsidies on essential food commodities such as rice, wheat, and sugar are provided by the government to assist such individuals financially. Through the public distribution system (PDS), the central government currently gives highly subsidized foodgrains at Rs 1-3 per kg to more than 81 crore citizens of India.
3. Cash Subsidy:
The government spends money directly to the targeted recipient’s account or firm as a cash subsidy. Cash subsidies include farm exports and the LPG subsidy. As you are aware, fuels such as LPG gas, kerosene, diesel, and others are utilized, and their value is growing with time. Poor folks are unable to purchase these items due to the increase in price. Keeping these factors in mind, the Indian government grants gasoline subsidies to the underprivileged. As a result, they are able to make a comfortable life. The Union Budget for 2020-21 allocates Rs 39,264 crore in subsidies for both fuels (Rs 35,605 crore for LPG and Rs 3,659 crore for kerosene), up from Rs 34,110 crore in the previous fiscal year. The government simply gives a quantity of money to a company or organization as a financial subsidy. The renewable energy industry is an example of a frequent cash subsidy in the United States; cash subsidies are offered to private enterprises in the renewable energy sector to support their expansion. The Central government’s part is 35.37 percent, which is almost half of the State government’s subsidies
4. Tax Subsidies:
The primary goal of the government’s tax subsidy program is to provide tax relief. There are several primary goals for doing so, including promoting all types of industries and expanding work prospects in any industry. The total value of social security benefits and subsidies provided by state governments is projected to be in excess of Rs. 600 billion (US$10 billion). As a result, the overall subsidy amount rises to Rs. 3,600 billion (US$60 billion). If your gross taxable income, after deductions, does not exceed Rs. 5 lakh in the financial year 2019-20 or assessment year 2020-21, you may be eligible for a refund of up to Rs. 12,500 as a resident individual.
5. Subsidies for Small-Scale Industries:
There are many jobless individuals in our nation, and the Government of India provides them with the required subsidies to enable them to establish their own business and become self-sufficient, resulting in all small businesspeople having to work on their own. The program is overseen by the Ministry of Small-Scale Industries. For qualified enterprises, the CLCSS provides a 15% up-front capital subsidy. The highest amount that may be received as a subsidy under the plan, however, is capped at Rs. 15 lakhs.
6. Subsidy for the Textile Industry:
As you may know, silk thread is used to make textiles in India, and silk thread is created from jute, cotton, and other natural fibers. People nowadays like silk-made clothing, but owing to the expensive cost, a trader must invest a significant amount of money to start a business in this area; therefore, if the government gives a subsidy in this area, such traders will have to invest less. India is a major textile and garment producer around the globe. India’s domestic apparel and textile sector accounts for 5% of GDP, 7% of industrial production in value terms, and 12% of export earnings.
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