Editing Subsidy (section)

==Categorising subsidies==

===Direct and indirect===

The first important classification of subsidies are direct and indirect subsidies. Subsidies are categorised as direct when it involves actual cash outlays targeted towards a specified individual or household. Popular examples includes cash grants and interest-free loans. Subsidies can also be classified as indirect when they do not involve actual payments. An example would be an increase in disposable income arising from a decrease in price of an essential good or service that the government has enforced in a form of monetary support. In contrast, a decrease in the price of a good or service may lead to an increase in revenue for producers earned from the heightened demand by consumers.<ref name="Subsidy">{{cite web |title=Subsidy |url=https://cleartax.in/g/terms/subsidy |website=ClearTax |access-date=27 April 2023 |archive-date=28 April 2023 |archive-url=https://web.archive.org/web/20230428125849/https://cleartax.in/g/terms/subsidy |url-status=live }}</ref>

The use of indirect subsidies such as price controls is widespread among developing economies and emerging markets as a necessary tool for social policy. It has proven to be effective in many cases but price controls have a potential to dampen investment activity and growth, cause heavy fiscal burdens for the government, and may even complicate the optimal performance of monetary policy. To prevent the undesirable negative effects, price control regimes may be replaced by creating social safety nets and proposing sound reforms to encourage competition and growth.<ref>{{cite web |last1=Guenette |first1=Justin-Damien |title=Price Controls, Good Intentions, Bad Outcomes |url=https://documents1.worldbank.org/curated/en/735161586781898890/pdf/Price-Controls-Good-Intentions-Bad-Outcomes.pdf |website=World Bank Group |access-date=27 April 2023}}</ref>

===Production and consumption===

Another important classification of subsidies are producer/production subsidies and consumer/consumption subsidies. Production subsidies are designed to ensure producers are advantaged by creating fluid market activity through other market control mechanisms or by providing cash payments for factors of production. Consumption subsidies benefit consumers typically through a reduction in the market price of goods and services. They are commonly used by governments of many developing countries in an attempt to secure the most basic needs for its population.<ref name="Subsidy"/>

===Broad and narrow===

These various subsidies can be divided into broad and narrow. Narrow subsidies are those monetary transfers that are easily identifiable and have a clear intent. They are commonly characterised by a monetary transfer between governments and institutions or businesses and individuals. A classic example is a government payment to a farmer.<ref name="Myers 2008">{{cite journal|last=Myers|first=N.|title=Perverse Priorities|journal=IUCN Opinion Piece|year=2008|pages=6–7|url=https://cmsdata.iucn.org/downloads/00_w_c_2008_02_perverse.pdf|access-date=2013-09-08|archive-date=2016-03-04|archive-url=https://web.archive.org/web/20160304063950/https://cmsdata.iucn.org/downloads/00_w_c_2008_02_perverse.pdf|url-status=live}}</ref>

===Monetary and non-monetary===

Conversely broad subsidies include both monetary and non-monetary subsidies and is often difficult to identify.<ref name="Myers 2008" /> A broad subsidy is less attributable and less transparent. Environmental externalities are the most common type of broad subsidy.