Government subsidies are a form of fiscal grants that are allocated to specific administrative tasks or programs of private sector or local government entities. The budget of government subsidies for FY 2011 amount to KRW 43.7 trillion, or 14.1% of the government budget(KRW 309.1 trillion), and the ratio of government subsidies has grown every year. On the other hand, subsidized programs are implemented by private or local government entities, leading to a significant number of illegally or in appropriately executed subsidy programs according to the Board of Audit and Inspection. Therefore, ensuring the effectiveness of subsidized programs as become a key task in order to ensure the efficient management of budgetary funds and achievement of allocation objectives. Until now, discussions on government subsidies have been conducted in terms of public administration and fiscal management from the perspective of intergovernmental transfer of funds. In this regard, this study aims to review the current Framework Act on the Budget and Management of Government Subsidies, and the proposed revision bill submitted by the government to the National Assembly, to identify the institutional tools for ensuring effectiveness as well as current limitations. The study will also seek to propose the introduction of additional measures to enhance the effectiveness of government subsidies. This study reviews the possible introduction of additional charges and public release of lists that contain unlawful concessionaires. Firstly, when subsidized programs are cancelled due to illegal or inappropriate execution, mandatory collection of cancelled subsidies is legally enforced. However, there are no legal stipulations on the collection of interest for delayed return of subsidies. As a result, this may lead to an inappropriate situation where unethical concessionaires can gain profits. Therefore, there is a need to include a legal basis for the collection of additional charges in the Framework Act on Government Subsidies. Furthermore, the central government entity has limitations in monitoring and overseeing more than 1,100 programs implemented by subsidized concessionaires in the private sector. Therefore, there is a need for the introduction of a system under which a list of unlawful concessionaires that have violated orders in the past is kept and managed. While administrative actions through subsidies are inevitable, and the amount of subsidies is increasing due to rising social welfare and regional development programs, the reality presents frequent unlawful and inappropriate execution of subsidies. In this regard, it is of utmost importance to ensure the effectiveness of government subsidies to achieve the intended objectives and maximize fiscal efficiency. Through additional measures for ensuring effectiveness, fiscal democracy could also be strengthened.