The correct answer is option 2: (C) and (D) only
To identify the incorrect statements about subsidies, let's evaluate each statement:
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(A) Subsidies are economic benefits granted by Government. This statement is correct. Subsidies are indeed economic benefits or financial assistance provided by the government to support or encourage certain activities or sectors.
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(B) Subsidies help in increasing production. This statement is generally correct. Subsidies can incentivize producers to increase production by reducing their costs or increasing their profitability.
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(C) Subsidies are not a burden on the Government budget. This statement is incorrect. Subsidies are indeed a burden on the government budget as they involve financial expenditure that must be funded through tax revenues or borrowing.
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(D) Subsidies are Capital expenditures. This statement is incorrect. Subsidies are typically classified as revenue expenditures rather than capital expenditures. Capital expenditures are for purchasing or improving fixed assets, while subsidies are payments to support certain activities or sectors.
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(E) Subsidies were needed to encourage farmers to test the new technology. This statement is correct. Subsidies can be used to encourage adoption of new technology or methods, including in agriculture, by offsetting the costs for farmers.
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