Which of the following is are true about price subsides in India according to Economic Survey 1 ...........

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Which of the following is/are true about price subsides in India, according to Economic Survey?

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 households more than poor households.

Select the correct answer using the codes given below.

1 only

1 and 2 only

2 and 3 only

1, 2 and 3

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Explanation:

Subsidies are negative tax.
There are two ways of giving subsidies:
Collecting tax from the poor at lower rate (Government forgoes income).
Paying subsidies to the poor (actually putting Government's money in the pockets of the poor).
So, the progressive subsidies are those where subsidies are paid to rich at a lower rate and the poor at a higher rate.
The rate of subsidy can be derived from either purchases, production or net income depending upon the scheme.