What does subsidy mean?
A subsidy is financial assistance given to reduce the cost of producing, purchasing, or using something, or to support an industry or activity. Governments commonly use subsidies for purposes such as supporting agriculture, encouraging renewable energy, keeping public transport affordable, or reducing the price of fuel. A subsidy may be paid directly to producers, offered as a tax reduction, or provided as a consumer discount. The word can also refer more broadly to a grant or form of encouragement. In economic and political discussion, subsidies are often debated because they can make selected goods or services less expensive while also potentially distorting competition or requiring substantial public spending. The word is commonly used in combinations such as government subsidy, fuel subsidy, and subsidy program.
nounA subsidy is money or financial assistance provided by a government or other organization to reduce the cost of a product, activity, or service. It may support industries, reduce prices for consumers, or encourage particular behaviors.
- Financial assistance, usually from a government, granted to reduce costs, support an industry, or encourage an activity.
- A broader payment or grant of support provided to a person, organization, or undertaking.
"The government introduced a subsidy for farmers to help reduce the cost of renewable energy production."
"The council awarded a subsidy to help keep the local bus service running."
"The fuel subsidy is intended to reduce household energy bills."
The standard plural is subsidies, with the final y changing to ies.
"Local governments introduced subsidies to help small businesses retain their employees."
A subsidy lowers the cost of something by adding public support behind it.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Where does subsidy come from?
The English word comes through French from Latin subsidium, a term meaning support or assistance and originally referring to a reserve of troops or resources held ready. Latin subsidium was formed from sub-, meaning under or beneath, and a root related to sitting or being placed, conveying the idea of something stationed below as support. The modern sense of financial assistance developed from this older idea of aid, backing, or provision. The related English words subsidiary and subsistence come from the same Latin family of forms.
Related word forms
How subsidy is actually used
In contemporary English, subsidy most often refers to financial support from a government or public authority. The term can also be used more generally for financial encouragement or support.
Easily confused with subsidy
A subsidy is financial assistance, whereas a subsidiary is a company or organization controlled by another company.