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In: Finance

what are the advatages and disadvatages of governemnt safety net ?

what are the advatages and disadvatages of governemnt safety net ?

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Expert Solution

Ans- Government Safety net is the programs offered by the government to help the people of the country and maintain a better life such as Health care schemes offered by the government to poor people, free education, housing schemes, legal benefits, social security, customer protection rights, etc. Government safety schemes are also known as social safety schemes. Because they are meant for the welfare of the people of that particular country.

There are a lot of advantages for government safety nets or programes:-

1 Health care services- There are various government schemes in health sectors which help the middle-income, low income, and poor people to maintain better health by taking universal health schemes given by the government which helps them to lead a healthy life.

2 Economic stability - Government provides various welfare schemes to the poor people like basic minimum income to workers, providing food with very low cost to the poor people, basic income to unemployed people and also government tries to generate employment for poor people from time to time. This helps to maintain stability in the economy.

3 Government safety net programs help people during wars, droughts, flood, etc. In this situation, the government gives financial aid to help people fight during the crisis.

4 Financial crisis- Government helps various financial institutes during the financial crisis to maintain stability in the economy by bailing them.

5 Government safety net programs help to fill the gap between poor and rich and it also helps the poor in living a better life.

Disadvantages of government safety net.

1 Tax burden increases - To maintain and give the financial benefits to the low-income group and poor people government needs the money and in that scenario, they increase the direct and indirect taxes on individuals and company.

2 Burden on Government Budget - Government spending increases due to various safety net programs which increases the burden on an economic budget because the government has to give a certain share of GDP to these schemes.

3 Leakages - It is a very common problem in these types of government programs if the full benefits are not received by the right people in that case corruption is likely to happen.

4 Welfare schemes are generally benefitted by the unemployed and poor people. In certain situation there has been evidence found that people are not doing jobs to get the welfare schemes. In that case, it will be wastage of tax taxpayers money.


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