Recently, the Indian government increased the number of LPG cylinders subsidized each year from 9 to 12. “A subsidy refers to government assistance to individuals or groups of individuals such as businesses, consumers, industries or businesses. sectors of an economy. » (Tragakes, Ellie. Economics for the IB Diploma. Cambridge University Press, 2012.) Such a program has several advantages as well as disadvantages. The main stakeholders affected by this decision are the government itself and the citizens. The government will have to pay an additional 3,300-4,000 crore. However, the increase in production means that around 97 percent of LPG consumers are now covered by the subsidy. So it has a negative impact on the government, it's beneficial for low-income citizens, but it has no real impact on wealthy citizens who can afford the bottles anyway. An increase in the number of subsidized LPG cylinders will lead to an increase in the number of subsidized LPG cylinders. The supply curve shifts to the right and the equilibrium price of LPG cylinders also falls. So although this is not a conventional subsidy diagram, in this case the government is deliberately increasing supply to reduce the price (thus helping citizens and acting as a subsidy). Additionally, the cost to the government is equivalent to (1,258-414)*12 per family, as shown in the shaded area of ​​the diagram. LPG is a necessity in every home, whether for cooking or heating. If it is subsidized, then it will become cheap and affordable for everyone. This will allow them to save money for other necessities that might not be subsidized. Another advantage is that LPG is a more environmentally friendly fuel than coal and other fossil fuels. Thus, by subsidizing it, the government encourages citizens to use it rather than dealing with more paper (subsidies before the increase in the ceiling). So, I think the money would be better spent if the bottles were subsidized only for low-income families. In the short term, I think such a program will have more positive impacts, as people will be able to spend money on other necessities. , while their fuel consumption will not increase much. However, I believe that in the long term the consequences will be even more unfavorable. including overuse and waste of fuel by families who have no incentive to save fuel. So, I don't think that increasing the cap is not a good decision on the part of the government, because they have not ensured that the people who actually need the grant are the ones who receive it, and that there is no better alternative for such a subsidy. large sum of money. Works Cited (Traragakes, Ellie. Economics for the IB Diploma. Cambridge University Press, 2012.)