Q.How does government policy affect entrepreneurial growth? Explain.

Government shapes the climate for enterprise through the policies and support it provides.

Government policy strongly shapes the environment for enterprise:

1. Industrial and licensing policy — rules on what may be produced and how easily a business can be started either encourage or discourage new entrepreneurs.
2. Taxation and incentives — tax concessions, subsidies and rebates lower the cost and risk of starting up.
3. Financial and credit support — loans, seed capital and priority-sector lending through banks and development institutions ease the capital constraint.
4. Infrastructure and industrial estates — developed land, sheds and utilities in industrial areas reduce the burden on the entrepreneur.
5. Training and promotional programmes — entrepreneurship development programmes, technical guidance and marketing assistance build capability, especially for first-generation and small entrepreneurs.
6. A stable legal and regulatory environment — clear laws, protection of property and contracts, and simple procedures give entrepreneurs the confidence to invest. …

Restricting the answer only to 'subsidies'. Government policy works through many channels — rules, taxes, credit, infrastructure, trainin …