First of all I would like to tell you all that this phone is not subsidised by the government, it is a initiative of a company named ringing bells pvt. Ltd a Noida based company. Ringing Bells president Ashok Chadha is primarily aiming to achieve this price point by making it a mass product and save from economies of scale.
Also, once their platform is well established, Chadha will opt for alternative sources of income. He mentioned that the company intends to make very little profits from the Freedom 251 particularly.
It may become a very usefull tool as now the people who could not afford a smartphone can now own one.
Best of luck to the company for future.
Jai hind.