Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon!

Mr Kudrin, the tax authorities are reporting an active and successful tax season. As we see from the federal budget, more funds have been collected than was originally anticipated. How do matters stand in Russia’s regions?

Alexei Kudrin:  Mr Putin, esteemed colleagues! In the last six months, regional revenues amounted to 3.729 trillion roubles, or 575 billion roubles, or 18%, more than during the same period last year.  

Vladimir Putin: What is the reason? How about profit taxes?

Alexei Kudrin: Regional revenue growth is partially attributed to the profit tax revenues that increased by 34%, or half of that growth (575 billion roubles), which amounted to 274 billion roubles.    

The second largest revenue increase was achieved through income tax, which grew by 100 billion roubles (or by 12%). Among these most significant revenue sources are…

Vladimir Putin: This suggests that personal incomes are growing.

Alexei Kudrin: Yes, salaries and personal incomes are increasing. Contrary to earlier assessments, an increase in insurance premiums did not significantly lower salaries and these revenues. In other words, in real terms, these revenues are ahead of inflation.

Vladimir Putin:  This growth is not very significant.

Alexei Kudrin: I agree. But our salaries do not grow rapidly as many businesses are keeping their operating costs low by not increasing salaries post-crisis.   

In addition, business property tax and excise tax revenues each have increased by 11%.

Among significant contributing sources are non-tax revenues and other taxes collected in Russia’s regions also increased by 38%.

Regions in need of assistance receive it from the federal budget. Through subsidies, the amount of funds allocated to regional budgets increased by 18%. This is roughly 127 billion roubles more than during the same period last year. Regional expenditures amounted to 3.02 trillion roubles, an increase of 10%. In this case, just as on the federal level, regions delay expenditures to the second half of the year. 

Salaries account for 33% of all expenses, and they are growing slightly at the moment. Investment expenditures have also begun to grow. With a 17% increase, they have started to grow appreciably for the first time in the last three years . During this period the regions have acquired a total budget surplus of 709 billion. Let me repeat that this surplus will diminish during the second half of the year. Only two regions have budget deficits. At the same time last year, there were 12 regions with budget deficits, now there are only two.

Vladimir Putin: Which?

Alexei Kudrin: Which regions? I’m not prepared to say right now… I just need to look at the documents over a longer period. Most likely, there will be more regions… Typically, these are heavily-subsidised regions.

Vladimir Putin: In the Caucasus?

Alexei Kudrin: Some of them are in the Caucasus and some are in the Far East.

During this period, regions have been using their surplus to reduce their debt burden. Part of it was spent on debt payments. Regions have reduced their loan and bond debts by more than 50 billion roubles. So in general, we have managed to receive more revenue than expected, which makes sense given the general improvement of the economic situation. 

Vladimir Putin: Thank you. Mr Fursenko, the first stage of university enrolment has been completed. Where does your work stand, and what do you plan to do in the near future?

Andrei Fursenko: This year the government has set the goal of enrolling 437,000 people in our state institutes of higher education (of which we have 553 nationwide), including 340,000 people for full time studies. This year, for the first time, we have created a special hotline and a working group to monitor the enrolment campaign. We received a lot of calls. As a result, the enrolment campaign went very well. Our colleagues from ministries and departments that are in charge of higher educational institutions took part in the working group. The first stage of enrolment is basically over, and the first lists of the first wave were posted on July 30. At the same time, all people on the government sponsorship lists were accepted, including 26,600 from our ministry. Enrolment for jobs in the defence industrial complex has been fully completed, with a total of 13,150 people.

What does this all mean? Enrolment has increased in some areas, and I’ve just discussed this issue with Ms Golikova. We have increased admission quotas for medicine, humanities and management. There is a higher demand for land surveying, land development, electronic equipment, automation and control, informatics and computer technology. At the same time, more than 100 institutions that our ministry is in charge of have not filled state-funded vacancies in a number of areas, such as the power industry, metallurgy, transportation and construction. This does not have to do with a lack of competition – it’s a matter of a shortage of applications for state-funded spots. What do we think should be done? A number of people initially applied to paid spots in these specialties, and we are now working with these institutions to transfer to state-funded spots those of them who have scored enough points in the Unified State Examination (USE).

Vladimir Putin: So, they will be transferred from paid to state-funded places?

Andrei Fursenko: Yes, that's right. At the same time there were many concerns that students would have to pay for postgraduate studies, and that it would be impossible to apply for a master’s degree. This year the number of state-funded spots for a master’s programme was greater than the number of applications. Everyone who is willing to go into specialties that are required by the economy have been enrolled in state-funded places. We’ll do all we can to enable those who have scored enough points to study in state-funded places, because the demographic situation is deteriorating and there are more state-funded places than there are postgraduate students. We must work with our colleagues to form a state order that would provide the funding for education in those jobs that the economy will need in the future.

Vladimir Putin: Thank you.

Ms Golikova, your ministry continues working on a barrier-free environment. What can you tell me about its work with the regions in this area?

Tatyana Golikova:  This spring you signed a resolution on the government programme, Accessible Environment for 2011-2015. On July 29 our ministry invited public organisations of handicapped people to a meeting of the council on regional accessible environment pilot projects. We chose three regions for testing these projects – the Tver and Saratov regions and the Republic of Tatarstan. In all, the programme provided 831 million roubles, with 347.8 million to the Republic of Tatarstan, 274 million to the Saratov Region and almost 209 million to the Tver Region. The regions must match the financing for these pilot projects themselves, and they have confirmed that they will do so. Thus, this year the regions will receive a total of 1.6 billion roubles for the implementation of three pilot projects.

What is the essence of these projects and what areas do they affect? They cover seven areas: education, healthcare, culture, transportation, information technology and communications, sports and physical fitness, and the housing fund. We are planning to create an accessible environment in these spheres in order to help handicapped people lead a normal life. With this in mind, the projects provide for the purchase of special equipment and training of personnel in these areas.

What is most important, and why have we chosen three pilot regions? For the first time, we are testing methodology for a barrier-free environment for people with disabilities, thereby fulfilling the commitments that Russia has undertaken by joining the Convention on the Rights of Persons with Disabilities, which it is going to ratify in the near future. I therefore think that the goal of the programme at the first stage is to test this methodology. After the pilot projects are over, we’ll determine which elements are appropriate in different areas of activity, and spread them to the rest of the country.

As of today, the Ministry of Justice has officially registered all the necessary documents for implementing these pilot projects, as well as all forms of reporting and monitoring. So we are, in fact, ready to implement the projects.

Vladimir Putin: Ms Golikova, what is a barrier-free environment? Could you explain this in everyday, practical terms?

Tatyana Golikova: This depends on the sector in question. Referring to housing , as I have mentioned, it implies creating parking spaces...

Vladimir Putin: Creating what?

Tatyana Golikova: Creating parking spaces for people with disabilities. This includes lifts, access ramps and other lift installation which would allow...

Vladimir Putin: …which would allow a person in a wheelchair to freely move from one storey to the other, or to enter the building.

Tatyana Golikova: Absolutely. As for the health sector, it means being able to make an appointment with a doctor without actually visiting the healthcare facility, or special medical equipment used to examine patients with disabilities, whether they are visually impaired or blind, or in a wheelchair. The same applies to inclusive education. A very substantial part of this programme concerns our colleagues. It includes computers and special educational equipment to be provided for children at these schools.

Vladimir Putin: Where do we all work?

Tatyana Golikova: What do you mean?

Vladimir Putin: I mean we work at the Russian government building. Do we have barrier-free environment here? We are trying to teach the country how it should be done but have we done it here? I guess not. We should.

Tatyana Golikova: This applies to all federal bodies.

Vladimir Putin: Let’s start with ourselves. I ask that the Ministry of Finance promptly and efficiently allocate funds from the government’s Reserve Fund for this purpose. I am sure it will not be expensive. Also, I ask that the government executive office monitor this process.

Let’s proceed to the agenda. I have another question concerning the agricultural sector. At various meetings with agricultural producers, colleagues raised the issue of so-called important regional agricultural programmes. Ms Skrynnik, I asked you to work it out.

Yelena Skrynnik, Minister of Agriculture: Mr Putin, in accordance with the government resolution you signed and on your instruction, the regional administrations are submitting programmes under economically significant regional programmes. These include agricultural enterprises’ traditional activities in the region, such as sheep breeding, vine crop cultivation and processing, irrigated farming and other areas, with a total of 6 billion roubles to be allocated. This makes it possible for agricultural enterprises to receive subsidies for these traditional activities in their regions. We have started work on this, and 29 regions have already submitted documents, including the Volgograd Region. They will work to develop irrigation for vine crop cultivation and for feed production.

Vladimir Putin: Good, thank you. The funding totals 6 billion, right?

Yelena Skrynnik: Yes, 6 billion roubles in total.

Vladimir Putin: Good.

Today, we will consider amendments to legislative acts on bankruptcy proceedings for consumer lending cooperatives. This is a new but expanding segment of the financial market. The greatest demand for their services is found in small towns and villages. The main thing that consumer cooperatives can provide is small loans that are easy to obtain, without much bureaucracy.

Consumer lending cooperatives provide services to the part of the population that is not of interest to large commercial financial enterprises. Today, Russia has some 2,000 consumer lending cooperatives that unite citizens with average incomes, who see this as the only opportunity to obtain loans to start their own business or to settle urgent financial problems in their families. However, sometimes pyramid schemes masquerade as consumer lending cooperatives, taking people’s money and promising high rates of return. We propose introducing amendments to the law that will help identify these fake cooperatives at an early stage and protect people from fraud. This involves, first of all, introducing additional grounds for instituting bankruptcy proceedings. Also, in the event that signs of bankruptcy are detected in self-regulated organisations, which include lending cooperatives, it makes it possible to petition the courts to declare a cooperative bankrupt. In addition, in the event of bankruptcy, the claims of members will be paid first in the amount not exceeding 700,000 roubles, while directors of the cooperative that files for bankruptcy will receive their money after all others. I believe this is fair.

We are going to take a decision on making an additional contribution to the special fund of the Northern Dimension Environmental Partnership. This international partnership was established in 2001 for financing large-scale infrastructure projects in the Baltic and the Barents seas. The partnership was set up with €150 million in contributions. The major partners are the European Commission, which contributed €44 million, and Russia, which contributed €40 million, followed by Sweden (€26 million) and Finland (€16 million). The partnership’s Russian portfolio comprises 20 projects worth some €3 billion, including the project for water supply and water discharge systems in St Petersburg, Syktyvkar, Arkhangelsk, a number of cities and towns in the Leningrad Region, as well as the construction of sewage facilities in Kaliningrad. I would like to emphasise that participation in the Northern Dimension Environmental Partnership will make it possible to obtain grants from other prominent international organisations on favourable terms.

I am confident that the new environmental projects that the partnership is going to launch in Russia will allow us to begin large-scale environmental activities more quickly.  

Today’s agenda also includes federal funding for Russian regions affected by natural disasters. Some 13 million roubles will be allocated to Saratov Region residents whose homes were flooded this spring. The government of Karachayevo-Circassia will receive 245 state housing certificates for residents whose homes were destroyed in heavy rainstorms, and so on. And there are several other issues to discuss.

Let’s get to work.