You might have heard the word “Subsidy” many times either from your friend, business partner, CA, peers or family. But, do you know exactly what is subsidy? How does it function?

Let us deep dive into the world of subsidy.

Subsidies are unplanned expenditures by the Central or State Government via discounts or grants to public/private companies with one objective: to make commodities affordable to the public. The companies can avail the benefits of the subsidies via discounts, tax rebates, lower input cost, cash payment, etc. Once the subsidies are availed, there is no requirement to pay it back in any form of transaction.

Why Subsidies are important in the Indian economy?

About 30% of GDP contribution is catered by Small and Medium Enterprises in India which is crucial for Indian Economic Growth, Employment and Entrepreneurial Development. Subsidies play an important role to keep up the inflation under control especially when global prices are rising or to protect the natural falling of industries in the long term.

What is the future of subsidies in India and why is it necessary for you?

The future of subsidies in India lies under the belt of Renewable energy, EV, Textile, Cold Chain and many others. It could assist in your expansion plan, increase production, help to run day-to-day operations smoothly, etc.