Question

Consider the following statements

1. Targeted subsidies are better for both beneficiaries and the government
2. Conditional subsidies are outcome linked subsidies

Which of the above are correct?

• A. 1 only
• B. 2 only
• C. Both 1 and 2
• D. None of the above

Answer 1

The correct option is C Both 1 and 2

Targeting in subsidy improves prioductivity of subsidy amount for both the beneficiaries and the government .Eg: Earlier LPG subsidies were given to all households, now with the 'give up' campaign and cap on annual income for subsidy it is targeting the subsidy to specific beneficiaries based on Aadhar linked accounts.This also ensures elimination of fake/ghost beneficiaries,improves efficiency and reduce corruption by tapping leakages

Conditional subsidies - Restriction based on fulfilling specific conditionalities Eg: in Janani suraksha yojana

Janani Suraksha Yojana (JSY) is a safe motherhood intervention under the National Rural Health Mission (NRHM) being implemented with the objective of reducing maternal and neonatal mortality by promoting institutional delivery among the poor pregnant women. Earlier Rs 6000/- were given unconditionally and it was not used for the desired purpose. Now specific conditions are enforced for subsidy provision. 1st Trimester - Registration = Rs 3000 will be provided and in Institutional delivery (Registration of Birth and Vaccination = 1500)