Production of goods which are injurious to health like alcohol, tobacco etc. are discouraged to produce through heavy taxation. On the other hand, production of "socially useful goods" are encouraged through subsidies. According to you, which function of budget is being talked about in the above statement?

None of the above

The answer is none of the above because the function which is referred here is "Allocation function", in which the government attempts to provide certain goods and services which market forces cannot supply.