[suhb-si-dee] 
| 1. | a direct pecuniary aid furnished by a government to a private industrial undertaking, a charity organization, or the like. |
| 2. | a sum paid, often in accordance with a treaty, by one government to another to secure some service in return. |
| 3. | a grant or contribution of money. |
| 4. | money formerly granted by the English Parliament to the crown for special needs. |
| sub·si·dy (sŭb'sĭ-dē) n. pl. sub·si·dies
[Middle English subsidie, from Anglo-Norman, from Latin subsidium, support : sub-, behind, beneath; see sub- + sedēre, to sit; see sed- in Indo-European roots.] |
A grant made by a government to some individual or business in order to maintain an acceptable standard of living or to stimulate economic growth.
Subsidy
A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy is usually given to remove some type of burden and is often considered to be in the interest of the public.
Politics play an important part in subsidization. In general, the left is more in favor of having subsidized industries, while the right feels that industry should stand on its own without public funds.
Investopedia Commentary
There are many forms of subsidies given out by the government, including welfare payments, housing loans, student loans and farm subsidies. For example, if a domestic industry, like farming, is struggling to survive in a highly competitive international industry with low prices, a government may give cash subsidies to farms so that they can sell at the low market price but still achieve financial gain.
If a subsidy is given out, the government is said to subsidize that group/industry.
Related Links
Macroeconomic Analysis
What Is Fiscal Policy?
See also: Fiscal Policy, Social Security, Taxes, Transfer Payment
Also spelled: Subsidization, Subsidize, Subsidized