Transcript of the beginning of the meeting:

Vladimir Putin: What is the situation in your region?

Mikhail Yurevich: I'd say that the situation is favourable.

Vladimir Putin: What are the results for the first half of this year?

Mikhail Yurevich: We saw overall industrial growth of 17.1% and the metals industry grew by 31%. We are currently comparing the budget revenues to those of 2008 rather than of 2009, they are still lagging behind, but not by much. We received almost 29 billion roubles in the first half of 2008 and 28 billion roubles in that of 2010. There is only a small difference. For reference, in 2009 we received 15 billion roubles.

Vladimir Putin: So, the region is recovering?

Mikhail Yurevich: Yes, it is recovering. I would like to note that the construction sector has revived, boosting demand for plots of land and construction materials. When the construction sector began to recover, the same happened across industry as a whole.

Vladimir Putin: And what about unemployment?

Mikhail Yurevich: The unemployment situation is improving but it is still not as good as we would like it to be. Unemployment peaked at 69,000 people and now stands at 48,000 people, which is a significant decrease. The economy is on the rise and the unemployment continues to fall.

Our current budget is more socially oriented, as compared to 2008. If in 2008 we spent 51.9% of the budget on social programmes, we now spend 59.8% on social programmes.

Engineering is currently the only sector causing concern. It is growing but not by much. I have regular conversations with the heads of major industrial concerns in order to understand this trend, to understand what is happening. It is crucial to know what they think, what orders they have and how they see the future.

If in the first quarter the first positive trends did not appear before March, then judging by May, June and the first half of July we can say that we are making the transition to sustainable growth.

Naturally, this sustainable growth is further facilitated by low interest rates on loans. Banks currently have substantial sums of money and offer reliable borrowers favourable terms on loans.

Vladimir Putin: What sort of terms are they, in general?

Mikhail Yurevich: The interest rate for good borrowers is 10% and for production facilities that are less financially stable the rate is 15% to 17%. At least it is lower than 20% or 24%. Businesses have seen a substantial production increase, for which they needed additional liquidity. However, later this year our businesses will start repaying their loans and growth will continue to speed up.

So, this is the situation.

Vladimir Putin: What about the situation with salaries and wages? Are there any wage arrears?

Mikhail Yurevich: There are some minor wage arrears totaling about 15 million roubles. This is a very small sum. I personally oversee all companies where there are such wage arrears. Presidential Plenipotentiary Representative in the Urals Federal District Nikolai Vinnichenko is also keeping an eye on the situation. We deal with each company which has its own objective reasons for such arrears. Nevertheless, such situations do emerge from time to time. On the whole, the situation with wage arrears is temporary, and that fact is very important.

The drought is the only negative factor affecting the situation in the Chelyabinsk Region. Thank God, it started raining on Monday, and we will have our own green fodder, including hay. We won't have to import fodder, as we did in 1975 when we had to import it from the Baltic republics. The regional budget stipulates an additional 300 million roubles for maintaining the breeding stock. Although there will be a small reduction in the number of fattening calves, I want local farmers to retain the pre-drought breeding stock population.

Rains will not change the situation in the plant-growing sector. In effect, drought-stricken crops will be written off. Surviving crops will be harvested. But we expect this year's harvest to be four times lower than in 2009.

Vladimir Putin: In this connection, damage assessment work should be carried out as quickly as possible.

Mikhail Yurevich: Yes, we are doing that now, experts are working on it. We have already submitted all data to the Ministry of Agriculture. I am in direct contact with the Minister of Agriculture. This work is underway.

Vladimir Putin: Good.