What is cross subsidization?

What is cross subsidization?

The practice of using profits generated from one product or service to support another provided by the same operating entity.

Is cross subsidizing a problem?

According to Osmo Soininvaara, political economics author and statistician and Finnish parliamentarian, cross-subsidy leads to welfare losses for passengers in urban areas, arguing that even if there are reasons for subsidizing public transport in sparsely populated areas, it is better to provide subsidy from general …

What is cross-subsidy in power sector?

Cross-subsidies involve a group of consumers paying more than the general cost of supply and the surplus is used to subsidize the provision to the other group at a price that is lower than the cost of supply to the subsidised group.

What is cross subsidy in electricity India?

What is the meaning of discoms?

distribution company
Noun. discom (plural discoms) (India) Acronym of distribution company. especially an electricity distribution company.

Is a subsidy a tax?

Subsidy. While a tax drives a wedge that increases the price consumers have to pay and decreases the price producers receive, a subsidy does the opposite. A subsidy is a benefit given by the government to groups or individuals, usually in the form of a cash payment or a tax reduction.

What’s the opposite of subsidize?

What is the opposite of subsidize?

repudiate annul
countermand disaffirm
disclaim ignore
renege renounce
repeal retract

What is cross subsidy in power sector?

What is Cross Subsidization? Cross subsidization is the practice of funding one product with the profits generated by a different product. This means that one group of customers is paying for the consumption of other customers.

What is cross-subsidies in electricity tariff?

Cross-subsidies in electricity tariff, therefore, can be defined as a mechanism whereby some consumer groups are charged a higher tariff as compared to the cost of supplying power to them.

What is the cross subsidy regime in electricity tariff in India?

As has been indicated above, the most crucial aspect of the regime of cross subsidies in electricity tariff in India is that industrial and commercial consumers are charged very high tariff rates to recoup a large part of the cost of service in the agricultural and the domestic sectors.

What are the advantages of cross-subsidised electricity sector?

Cross-subsidised electricity sector encourages consumption of electricity. Cheap electricity supplied to farmer’s effects groundwater level due to indiscriminate extraction. A free-market is the fastest and most efficient way to correct the market distortions. Cross-subsidies ob-struct competition in the retail supply of electricity.