1.

The Great Depression was a severe worldwide economic depression in the decade
preceding World War II. The timing of the Great Depression varied across nations, but in most
countries it started in about 1929 and lasted until the late 1930s or early 1940s.
[1]
It was the
longest, most widespread, and deepest depression of the 20th century.
[2]

In the 21st century, the Great Depression is commonly used as an example of how far the world's
economy can decline.
[2]
The depression originated in the U.S., starting with the fall in stock prices that
began around September 4, 1929 and became worldwide news with the stock market crash of
October 29, 1929 (known as Black Tuesday). From there, it quickly spread to almost every country in
the world.
The Great Depression had devastating effects in countries rich and poor. Personal income, tax
revenue, profits and prices dropped, while international trade plunged by more than 50%.
Unemployment in the U.S. rose to 25%, and in some countries rose as high as 33%.
[3]

Cities all around the world were hit hard, especially those dependent on heavy industry. Construction
was virtually halted in many countries. Farmingand rural areas suffered as crop prices fell by
approximately 60%.
[4][5][6]
Facing plummeting demand with few alternate sources of jobs, areas
dependent on primary sector industries such as cash cropping, mining and logging suffered the
most.
[7]

Some economies started to recover by the mid-1930s. In many countries, the negative effects of the
Great Depression lasted until the start of World War II.
[8]

2. The Oxford English Dictionary defines subsidy as money granted by State, public
body etc to keep up the prices of stationaries etc
[edit]Objectives
Subsidies, by means of creating a wedge between consumer prices and producer costs, lead to
changes in demand/ supply decisions. Subsidies are often aimed at :
1. inducing higher consumption/ production
2. offsetting market imperfections including internalisation of externalities;
3. achievement of social policy objectives including redistribution of income, population control,
etc.
[edit]Forms of subsidies
A cash payment to producers/consumers is an easily recognisable form of a subsidy. However, it also
has many invisible forms. Thus, it may be hidden in reduced tax-liability, low interest government
loans or government equity participation. If the government procures goods, such as food grains, at
higher than market prices or if it sells as lower than market prices, subsidies are implied.
Transfers which are straight income supplements need to be distinguished from subsidies. An
unconditional transfer to an individual would augment his income and would be distributed over the
entire range of his expenditures. A subsidy however refers to a specific good, the relative price of
which has been lowered because of the subsidy with a view to changing the consumption/ allocation
decisions in favour of the subsidised goods. Even when subsidy is hundred percent, i.e. the good is
supplied free of cost, it should be distinguished from an income-transfer (of an equivalent amount)
which need not be spent exclusively on the subsidised good.
Transfers may be preferred to subsidies on the ground that i) any given expenditure of State funds will
increase welfare more if it is given as an income-transfer rather than via subsidising the price of some
commodities, and ii) transfer payments can be better targeted at a specific income groups as
compared to free or subsidised goods.
The various alternative modes of administering a subsidy are:
1. Subsidy to producers
2. Subsidy to consumers
3. Subsidy to producers of inputs
4. Production/sales through public enterprises
5. Cross subsidization
In the context of their economic effects, subsidies have been subjected to an intense debate in India
in recent years. Some of the major issues that have emerged in the literature are indicated below:
Whether the magnitude and incidence of subsidies, explicit and implicit, have spun out of control;
their burden on government finances being unbearable, and their cost being felt in terms of a
decline of real public investment in agriculture.
Whether agricultural subsidies distort the cropping pattern and lead to inter-regional disparities in
development
Whether general subsidies on scarce inputs like water and power have distorted their optimal
allocation
Whether subsidies basically cover only inefficiencies in the provision of governmental services
Whether subsidies like (food subsidies) have a predominant urban bias
Whether subsidies are mistargeted
Whether subsidies have a deleterious effect on general economic growth of sectors not covered
by the subsidies
Whether agricultural subsidies are biased against small and marginal farmers
How should government services be priced or recovery rates determined
What is the impact of subsidies on the quality of environment and ecology