Which of the following is an example of an implicit subsidy?
- A.The amount paid to the Food Corporation of India
- B.Irrigation water supplied below its cost of supply
- C.The cash credited under PAHAL
- D.The subsidy paid to fertiliser manufacturers
Correct answer
Explanation
The correct answer is B, irrigation water supplied below its cost of supply. An implicit subsidy does not appear in the budget as a payment; it is hidden in the low price at which a public service is provided, so that the government simply recovers less than it spends, as happens with canal water and with electricity supplied to farms. Option A is wrong because the payment to the Food Corporation of India is shown in the budget as the food subsidy and is therefore explicit. Option C is wrong because the money credited to a consumer's account under PAHAL is an explicit transfer that can be counted to the last rupee. Option D is wrong because the amount paid to fertiliser companies is also a budgeted payment and is the fertiliser subsidy of the accounts.
Read the full article: Subsidies and Direct Benefit Transfer in India: Notes
Practice Questions
View allThe Direct Benefit Transfer scheme of the Government of India was launched on which date?
- A.1 January 2013
- B.15 August 2014
- C.1 April 2015
- D.26 January 2016
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Direct Benefit Transfer began on that date in a small group of districts and for a limited number of schemes, and was then extended across the country and to hundreds of central schemes, paying scholarships, pensions, wages and subsidies into the beneficiary's own bank account.
Read the full explanation →In the context of Direct Benefit Transfer, the JAM trinity stands for:
- A.Jan Dhan, Aadhaar and Mobile
- B.Jan Dhan, Agriculture and Market
- C.Jobs, Aadhaar and Money
- D.Jan Dhan, Ayushman and MGNREGA
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The Economic Survey of 2014-15 used the expression JAM number trinity for these three, because together they make it possible to send money to a poor household without a middleman: the Jan Dhan account receives the payment, the Aadhaar number identifies the beneficiary and removes duplicate names, and the mobile…
Read the full explanation →The PAHAL scheme of the Government of India is related to the direct transfer of the subsidy on:
- A.Fertilisers
- B.Domestic LPG
- C.Food grains
- D.Kerosene for industry
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PAHAL, the direct benefit transfer scheme for cooking gas, was begun in fifty-four districts in November 2014 and extended to the whole country from 1 January 2015; the consumer buys the cylinder at the market price and the subsidy is credited to his bank account, and the Give It Up…
Read the full explanation →In the Union Budget of India, which of the following is NOT counted among the major subsidies?
- A.Food subsidy
- B.Fertiliser subsidy
- C.Petroleum subsidy
- D.Education subsidy
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The budget documents group food, fertiliser and petroleum together as the major subsidies, because they are the three largest explicit subsidy payments made by the central government.
Read the full explanation →Under the National Food Security Act, 2013, a priority household is entitled to how much food grain?
- A.Five kilograms per person per month
- B.Thirty-five kilograms per person per month
- C.Five kilograms per household per month
- D.Ten kilograms per household per month
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The Act divides the covered population into priority households, who receive five kilograms of grain for each member every month, and Antyodaya Anna Yojana households, which are the poorest and receive thirty-five kilograms for the whole household every month.
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