<P> A subsidy is a form of financial aid or support extended to an economic sector (or institution, business, or individual) generally with the aim of promoting economic and social policy . Although commonly extended from government, the term subsidy can relate to any type of support--for example from NGOs or as implicit subsidies . Subsidies come in various forms including: direct (cash grants, interest - free loans) and indirect (tax breaks, insurance, low - interest loans, accelerated depreciation, rent rebates). </P> <P> Furthermore, they can be broad or narrow, legal or illegal, ethical or unethical . The most common forms of subsidies are those to the producer or the consumer . Producer / production subsidies ensure producers are better off by either supplying market price support, direct support, or payments to factors of production . Consumer / consumption subsidies commonly reduce the price of goods and services to the consumer . For example, in the US at one time it was cheaper to buy gasoline than bottled water . </P>

Where does the money for subsidies come from