 the good is supplied free of cost, it should be distinguished from an income-transfer (of an equivalent amount) which need not be spent exclusively on the subsidised good.Transfers may be preferred to subsidies on the ground that i) any given expenditure of State funds will increase welfare more if it is given as an income-transfer rather than via subsidising the price of some commodities, and ii) transfer payments can be better targeted at a specific income groups as compared to free or subsidised goods.The various alternative modes of administering a subsidy are