A subsidy is a financial contribution made by the State for a social purpose.
Originating from the Latin subsidĭum , the concept of subsidy identifies public assistance based on economic aid or benefit . It is a system focused on stimulating consumption or production , or an aid that is granted for a certain period of time.
For example: "I am going to start the process to collect unemployment benefits" , "The government announced a subsidy to encourage the consumption of electronic products in the province" .
The subsidy, a monetary aid
The subsidy is used to achieve a social purpose (to cite specific cases, so that all families can have access to the basic food basket, so that the lower classes can afford to buy a home, etc.) or to favour, for different reasons, certain productive activities or regions of a country.
As for this specific meaning, we have to say that, for example, in Spain this type of subsidy has become the fundamental part of the livelihood of many families. The economic crisis that is being experienced has led to millions of citizens being left without work, which is why they need this monetary aid to be able to maintain their housing and cover basic needs .
We cannot ignore the fact that the term we are discussing is widely used in Nicaragua to refer to the temporary leave suffered by a specific worker when he or she suffers from an illness. This period, the duration of the leave, during which the aforementioned employee will continue to receive his or her corresponding salary.
There are different types of subsidies.
Difference in values
A subsidy could be defined as the difference that is seen when comparing the real value of a product or service and the value that the consumer pays to access said product or service.
In these circumstances, the government distributes subsidies to companies to prevent prices or rates from increasing: "The president decided to extend the subsidy to electricity companies to prevent further increases."
Supply or demand subsidy
It is possible to distinguish between supply subsidies (which are granted to producers or service providers) and demand subsidies (which allow users to reduce their payments).
Within demand subsidies, there are direct subsidies (through which the State directly pays a portion of the service to consumers) and cross-subsidies (the State does not establish a single rate for all consumers, but some pay more for the service so that others can pay less).
And all this without forgetting that there are the so-called production subsidies , which are the current payments that the government of a federal state makes to the different companies in the country for the fact that they contribute to the production of the country. Payments that, as could not be otherwise, are made in proportion to the aforementioned productive participation.
The concept in religion
In the past, in the ecclesiastical sphere there was also something known as a subsidy, although it is no longer used.
At that time, that term was used to refer to the aid that the Kings of Spain received from the top of religious organizations and that was related to the ecclesiastical income of the territories that they governed.