The Government decides to give budgetary incentives to investors for making investments in backward regions. Explain these possible incentives and the reasons for the same.

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Solution

Budgetary incentives refer to concession in taxation and granting subsidies to those production units which set up their units in economically backward areas. Tax concessions, like lower Goods and Services Tax (GST), aimed at reducing cost and thus raising profits.
Subsidies aimed at reducing the prices of products to encourage sales and earning more profits. Thus, both aim at raising profits.

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