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Question

63. Which of the following is/are true about price subsides in India?
1. Price subsidies are often progressive unlike other subsidies.
2. They may distort markets in ways that ultimately hurt the poor.
3. They benefit wealthy household’s more than poor households.
Select the correct answer using the codes given below.

  1. Only 1 and 2
  2. Only 1 and 3
  3. Only 2 and 3
  4. All of the above


Solution

The correct option is C Only 2 and 3
Price subsidies are often regressive- By regressive, we mean that a rich household benefits more from the subsidy than a poor household. Price subsidies can distort markets in ways that ultimately hurt the poor.

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