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What are welfare payment or consumer subsides?

  • Economics - ,

    Welfare payments or consumer subsidies are the benefits that government provides to the consumers without asking anything for return. In other words, it is the transfer payment made by government for the benefits of consumers.
    There are many reasons why government provide welfare payments or consumer subsidies:
    1. If the market price of a good is very high and many consumers are not able to buy the product at that price, then government might provide welfare payments or consumer subsidies.
    2. If the good is necessity, say cooking oil, the case of government providing consumer subsidies become very strong. This is because cooking oil is consumed by all sections of the society and therefore government would like to provide it at reasonable price/lower price.

    I hope that this helps.

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