Ok Mr. Atul. Here is my take on your post.
I am unable to understand whether you are in support of, or against competition.
On one hand you seem to tell us that subsidies help wipe out competition, which in your view is a good thing. On the other hand you cite the example of Airbus, that wiped out the dominance of Boeing by getting subsidies, which again in your view was a good thing to happen. Did'nt this create a fresh competion in the Airliner market, which you seem to be in favor of.
Yaar! make up your mind, and let us know if you think competition is good or bad.
Coming back to subsidies, I wold like to cite the example of sugar production in the United States. It is a very commonly discussed issue in most basic and advanced level Microeconomics courses.
Foreign sugar producers are able to sel sugar at much lower prices to consumers in the US, in comparison to the domestic sugar producers. The domestic sugar producers manage to get heavy tarriffs levied on imported sugar, and get heavy subisidies for their own production operations, while getting a price floor on sugar prices. This means that the domestic sugar producers eliminate foreign competion, and get tonnes of free monies in terms of free subsidies. Now those who think that the consumer would benefit indirectly because of this nature of domestic producers, are completely wrong. Because of price floors, domestic sugar producers manager to charge prices over a certain level for their produce. Thus the whole concept of benefits trickling down to the consumer goes to trash, as domestic sugar producers thicken their pockets at the cost of consumers and foreign producers.
A very small group of people who form the US doemstic sugar producers benefit from subsidies and other eocnomic evils like tarrifs and price floors. While a large number of domestic consumers suffer due to high sugar prices. Finally, the foreign producers of sugar sufer too, as they loose a major chunk of the "US sugar consumption pie."
Thus we end up with a producer surplus for domestic sugar producers at the cost of welfare of the domestic sugar consumers.
Where do subsidies come from?
Governments tax citizens. The tax money funds subsidies that are disbursed to special interest groups. But subsidies come at a cost to these special interest groups. They hire PR firms and lobby firms to noose the government into giving them subsidies. Such activity costs money. In the above example, the special interest group is "Domestic Sugar Producers of America." They pay the PR firms and lobby firms insane amount of money to get free money from the government, which in your words means "subsidies." The PR firm and Lobby firm fees come out of the subsidy money. To put it together, tax payers pay special interest group free money, and also pay the special interst groups' PR firms and Lobby firms which help subsidies happen. All they get in return is highly priced commodities. So, in a way consumers or tax payers pay to get themselves screwed at the end of the day.
I do not find it the right platform to disemburse all the theory that proves my point that "subsidies" are evil." Those with sound mental capabilities would have got my point by now.
My entire understanding of economics is based on voluntaryism. No one but you knows whats best for you. That is why you should be in charge of making decisions that affect you. Governments and other authoritative institutions make decisions that help their personal needs and quest for power. Everyday, government officials all over the world are nailed for passing personal favors to their near and dear ones, at the cost of their constituents.
Competion is healthy. It provides consumers with choice. I believe that you are a consumer too several times, every day of your life. You choose where to live. You choose what clothes to buy. You choose what food to eat. You choose the phone company. You choose among several brands. You choose what car to buy. and on and on.
Competition provides consumers to decide the configuration that satisfies their personal needs, keeping in mind their bare necessities and budgeting abilities. Competion filters out inefficiency. Only those who are willing to provide goods and services at prices that the consumers are willing to pay survive the competition. I am sure that you wont like a producer or service provider that fails to provide you with goods and services that fail to meet your expectations, and also make you pay beyond your ability.
Price ceilings, price floors, rationing, subsidies, tarrifs etc. are hallmarks of socialism. The only reason that socialism in its purest form didnt even survice a century was because rational people have no tolerance for social elements that come at the cost of their individual or economic liberty.
The only reason that some of these elements still "parasite" upon our society is becuase they are passed on to us by the government as 'sugar laced sour pills." When people are explained in detail what these conepts actually stand for, and do to our societies, atleast the rational ones instantly oppose them. That is why their is a very strong oppostion to government's taxation policies in the United States. But people fail to get their economic liberty from the government, because the institution of government has become more powerful than people can handle.
This is a question that I ask most people that give them a reason to rethink their ideas. Let me repaeat a conversation between me and my brother, that will get accross the point.
How much taxes do you pay every year. he told me that last year they deducted $18000 from his paycheck. I asked him, if he was happy about it. He said: noway. So I gave him an option. If you had the option to pay just half of what you paid last year, would you pay it? He was like, ofcourse. What if instead of paying the IRS (Internal Revenue Services) would you stop a homeless bum every year, and give him the $ 9000? To this he said, you must be out of my mind. But he got my point. Government takes money from you and gives it away to bums who are nothing but unproductive elements in our society. If you had the option, you wont pay taxes, because you know that you have btter uses for that money, than the governmentdoes. I do not know of anyone who pays taxes happily. I wonder though, if you hop all the way to the tax office eveyr year, with a smile on your face and a daisy flower in your hair.
Look Atul, you must be really upset by the way I critique arguments. But then I have no tollerance for irrationality and bad logic. Socialism falls under those categories. I am sure we still have a lot of things in common that cam make us good friends.
atul.jhajhria said:
We are talking about subsidies, not international aids. International community is always against most of the subsidies government provides.
Also subsidies does not mean we are getting something which we dont deserve. Subsidies are aimed to wipe out competition from the market.
If you think countries who get subsidies rarely progress then think again. USA gives largest sum of subsidy to its farmers in whole world
. Other countries like Canada and european nations has biggest problem with it and always cries foul.
Apart from agriculture, there are lots of example where subsidy has done wonders for their countries. The most prominent example is Airbus. It was so much subsidized that it not only finished boing's dominance but became dominant itself.
Its so amusing to see people of developing countries raising concerns for subsidies in their own country when developed countries are continuously giving huge subsidies to their farmers.
http://en.wikipedia.org/wiki/Agricultural_subsidy
From this article only read these texts
The main criticism of these programs is that they promote poverty in developing countries since those economies depend on their agricultural production and they can't compete with subsided and therefore low priced commodities. Another criticism is that the same funds could be spent on other goverment activities such as crime control, education, military defense, etc.
It is developed countries who need to cut the subsidies, not developing countries.
..
Giving subsidy or cutting subsidy depends upon the health of a Nation. Since we are talking in context to India. Providing subsidy is only option to win in international market. 
