Vladimir Putin: Mr Mikhailov, how do you assess the social and economic situation in the region?

Alexander Mikhailov: Mr Putin, first of all I would like to thank the Government, the ministries concerned and you personally for choosing the Kursk Region, specifically our enterprise, Farmstandart-Lekstredstva, as the venue of a meeting on such an important matter as the production of medicines.

I would describe the social and economic situation in the region as fairly stable. We work within the framework of the regional development strategy adopted last year. On most counts our work has received good marks from the Interagency Governmental Commission.

Most of our plans by sector dovetail with those of the federal ministries. It enables us to interact fairly well in solving many of the problems facing the region.

We have more than 15 targeted investment programmes in various parts of the economy and social development. We use the resources of the regional budget in the framework of these programmes.

As for the investment climate, I would describe it as quite attractive. As of today, 58 contracts have been signed with investors, including 20 in industry and 22 in agriculture. Contracts have also been signed in construction, transportation and communications.

The last year has shown that such a systemic approach yields good results. For example, industrial output increased by 8.8% last year. For the first time in 17 years, agricultural output has grown by 9.4%.

We have made some progress in the social sphere because today we have an opportunity to direct more funding into that sphere. For example, regional spending on education increased by almost 7 times and the spending on public health by 6.5 times between 2001 and 2007. That has stabilised the situation in these sensitive areas. We are coming to grips with the cultural sphere. I would like to note that last year, pursuant to your instructions, the region held a Russian language year. In addition we have launched a regional programme called "The Year of Libraries". The two were complementary. As a result we have almost 20 model libraries, practically in every district. They set an example for other libraries. Municipal entities have joined this process actively. This year has been declared The Year of Museums and Traditional Folk Culture. That is also very interesting.

Speaking of prospects, they are ensured by the regional development strategy and we would like to accomplish an innovation breakthrough, which is the main scenario envisaged by the strategy.

In industry we seek to diversify production and increase the share of manufacturing. As for the agro-industrial complex, we are committed to increasing the production of grain, sugar beet and livestock products.

Vladimir Putin: It was not a bad year for you in agriculture. And the outlook is fairly good.

Alexander Mikhailov: Yes. This year we have almost 100,000 hectares more under grain crops and we are planning to bring in a harvest not of 2.2 million metric tons but at least 2.5-2.7 million.

Vladimir Putin: How much farmland have you brought into cultivation recently?

Alexander Mikhailov: About 550,000 hectares in the last six years.

Vladimir Putin: Practically a third of the land under crops?

Alexander Mikhailov: Yes, one-third of all the cultivated land. In 2000 these lands were not used. Of course it was the scourge of the Central Black Soil Region but this cannot be tolerated.

This year will see the completion of our targeted programme. We are to bring 93,000 hectares under cultivation.

Today I can report that we have already brought in 75,000 hectares. We will finish the job before autumn.

Vladimir Putin: What is the average wage in the sector?

Alexander Mikhailov: The average wage in the region this year was 11,000 roubles. We are aware that this is not a very high figure, but it is normal considering the conditions in our region.

Vladimir Putin: How big was the increase last year?

Alexander Mikhailov: Wages rose 24% compared with 2006.

Vladimir Putin: You mean in nominal terms?

Alexander Mikhailov: Yes, in nominal terms. I cited the percentage.

Vladimir Putin: And in real terms?

Alexander Mikhailov: In real terms, between 8.5% and 10%.