Government providing interest free loan to target industries are called
Answers
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Answer: Subsidy.
Explanation:
When Government provides interest free loan to target industries it is referred as Subsidy.
The term subsidy is used when the government provides incentive to an economic sector which includes institution, business or individual in the form of financial aid or policy to support it.
Subsidies are provided through various modes like low interest loan, interest free loan, tax breaks,cash grants, rent rebates, insurance etc.
The most relevant subsidy is the one given to the producer and consumer. Production subsidy are granted to producers to support them in the form of realizing the correct market price for them. These subsidies also help them in discharging their obligations related to direct factors of production. Consumption subsidies are given to consumers which ensures reduction in the price of goods and services.
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