Concept in Definition ABC

A subsidy is that help or extraordinary financial aid that is granted by an official body to a person or group that shows that they need it to be able to satisfy their basic needs.

Economic assistance that someone receives from another so that he can satisfy her needs, so that she can acquire a good or service, among others

For example, a disability benefit, an unemployment benefit, among the most recurrent.

Meanwhile, the subsidy in question may observe different objectives or missions, that is, a subsidy may have the purpose of stimulating the consumption of a certain good or service, the production of another good or service x, or simply being an economic aid for a period of time until a critical moment is overcome, a clear example of this type of subsidy is that of unemployment; an individual who is laid off or is unemployed for any other reason will receive the allowance for 8 months, meanwhile, if before that period he gets a job, he must notify him and the subsidy falls completely. “

The government Argentine announced a new subsidy that will be destined to pregnant women.”

The state, a great giver of subsidies

States normally make use of this type of practice in order to achieve a certain goal. social, for example, that all families can meet their basic needs or have access to basic basket food; or on the other hand, as indicated above, they are also delivered with the objective of favoring, for different reasons, certain productive activities or regions of the country.

Also, it turns out to be a frequent practice for the government to provide subsidies to some companies to prevent them from increasing their prices and so on. situation causes a very serious problem in consumption and in daily economies as a consequence that it is a highly popular.

Among others we can cite the subsidy to some public transport, to companies that offer electricity and gas services, among others.

So, taking these considerations into account, we could say that the subsidy is the difference that exists between the real price of a service or a product and the price that the consumer pays to obtain it or access such service, while the The difference between that real value that the product or service costs and what the user or consumer pays ends up assuming someone, a company, the state, between others. .

Subsidy classes

We may find two types of subsidies, demand subsidies (those intended to reduce the value paid by the user) and the supply subsidies (They are granted to service providers or producers).

And within the demand subsidies, we find two sub-categories: direct subsidies (They are those from which the state directly pays a part of the service in question) and the cross subsidies (The state will not charge all consumers the same amount, some will actually pay more than others.)

Voices for and against subsidies

There are many controversies around the issue of subsidies, always, in principle, in relation to who normally delivers them, because many times, governments do unfortunately a discretionary use of them and most of the time they end up in the hands of those who do not need them, or failing that, people who also use them are left aside. need.

On the other hand, the subsidy is also severely questioned because it often tends to become a gift to people, which is maintained over time and does not urge the person who receives it to improve their situation in life, because of course, they feel comfortable with the perception of that subsidy.

And on the other hand, the person who delivers it also does nothing to motivate him, to encourage the individual who receives the subsidy to seek to get out of his situation.

For example, you are given unemployment or family numerous but the corresponding follow-up of the person is not carried out in order, in addition to the subsidy, to deliver tools and resources that help you change your situation for the better, that is, provide you with resources that allow you to evolve in life, for example, study, in order to receive and find a good job that improves your life.

And with regard to the subsidies that are given to companies to, for example, favor consumption, also there are usually criticisms because in reality that is usually a double-edged sword if at the same time, the government, not accompanies the politics with other measures that allow little by little to remove this subsidy.

Controversy scene in Argentina

In the Argentine Republic it has happened that with the subsidy that the state allocated until 2016 to public services such as electricity, water, and gas, a tremendous problem of cost effectiveness for the borrowing companies and the impossibility of the same to allocate money for investments That they improve them, of course the service got worse every time.

Starting with the government that took office at the end of 2016, an attempt was made to correct this problem by increasing rates, and of course, this generated severe problems in family economies and in those of companies that suddenly find themselves having to pay bills with stark amounts, which they cannot afford and in the context of a great inflationary situation of the country.

Subsidy Topics