Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon, Mr Orlov.

Alexei Orlov: Good afternoon, Mr Putin.

Vladimir Putin: What are your republic’s economic performance results, Mr Orlov?

Alexei Orlov: Thank you, Mr Putin. I believe the situation is generally decent. This echoes the subject of the meeting you held with us some time ago in the sense that statistics can sometimes point to grave economic problems or even to a downturn, while the index of contentment with the quality of services rendered or with the performance of regional authorities may point in an opposite direction, like it was in Kalmykia during the year that my team and I were at the helm. I mean that the latest elections to the State Duma reflected the real state of affairs. We focused on the real sector of the economy. With your permission, I would like to dwell on this in more detail.

Last time we met with you, about a year ago I told you about some projects, specifically agricultural projects, because 30% of the republic’s gross regional product comes from agriculture. Among other things, I referred to feed yards and feeding farms, a meat-packing plant, and the construction of southern Russia’s largest broiler plant. I have a presentation on the projects in Kalmykia. This (shows the materials) is the first stage of the broiler plant that will be able to produce 10,000 metric tons of chicken meat per year. I would like to point out the pace of construction. Just two photographs… We began in September 2011. This is October 2011. And this is shortly before the New Year. (Thank God, the winter in our area is mild enough to let the construction continue.) We are planning to launch the first stage by the beginning of the fourth quarter of this year. The project will be of much help to people in that area.

Next item. Last time I reported to you about a project to build a meat-packing plant and even asked you to give us a hand. Thank you, we did get an aid package from the federal government. Last November, we began building, jointly with a private investor, a meat-packing plant that will turn out 20,000 metric tons of meat product annually. The project is based in the Ketchenerovsky District, and it will use a full-cycle process with state-of-the-art equipment and 21^st-century methods. For the first time in Russia a plant will use 90% of its primary stock, to the point that four years later it will operate on methane gas, thus becoming self-sufficient in fuel.

To keep the plant supplied with livestock, we have begun building feeding farms. The first one for 1,500 head of cattle was launched last year. Here it is at the beginning of last year. Right now it is fully operative and can accommodate 5,000 head of cattle. Also, we sold some livestock twice during 2011, but, regrettably, to customers from elsewhere because we lacked the processing facilities of our own. We are planning to finish the construction of another feeding farm by late April of this year. The construction is in progress, thanks to our mild winter weather (shows the materials)… Here you can see Mr Vladimir Yakushev (Governor of the Tyumen Region) visiting us. This year we will build a second meat-packing plant in Kalmykia together.

Vladimir Putin: But why did your industrial production decline in 2011? Investment was good.

Alexei Orlov: But we have increased agricultural output, Mr Putin. As for industrial output, we did have a downturn, but this can be explained by the fact that there is basically no industry as such in Kalmykia today.

Vladimir Putin: Yes, I know. But there is a decline all the same. What was its cause?

Alexei Orlov: First of all, it was caused by the 2008 crisis. It reached us, too, if belatedly. We were not hit in the same way as other regions. The crisis reached us in 2011, but it did have an effect. Second, the inflow of investment began in the autumn of 2011 and this capital is not reflected in the 2011 statistics.

Vladimir Putin: No, but how were the investments supposed to reach it and why? The investments most likely include this. But why did the industrial production decrease? Which enterprises faced difficulties in 2011?

Alexei Orlov: The housing construction plant is in a very poor condition as a result of its past debts. It is in huge debt to creditors. Moreover, we had to reorganise the plant using our own resources, and we managed to maintain control over a difficult situation with the personnel for an entire year. We kept wages at the same level, prevented unemployment and most importantly, we still hope that the measures we took in 2011… Yes, the decline you rightly pointed to occurred in 2011, but the anti-crisis measures that we have taken cannot give us an immediate result.

Vladimir Putin: What about 2012?

Alexei Orlov: They should work in 2012.

Vladimir Putin: Good. What is the state of education, healthcare? What can you tell me about the modernisation programme in healthcare and support of schools?

Alexei Orlov: The results in healthcare and education are quite good, but I would like to highlight one point. This has to do with performance criteria and the criteria for evaluating executive authorities' performance. We expect that the main indicator for us will be people's satisfaction with the quality of medical services.

Vladimir Putin: I see…

Alexei Orlov: Despite low indicators in other…

Vladimir Putin: Good, but what is the payment like?

Alexei Orlov: Salaries are low. In general, they are low…

Vladimir Putin: Is the average salary higher or lower than the average in the economy?

Alexei Orlov: It is higher than the average in the economy.

Vladimir Putin: Yes, it is rather low. What about teacher salaries?

Alexei Orlov: The situation is the same with education. We had to adopt an austerity budget at the end of the previous year, that is, 2010. We reduced the budget from over 9 billion roubles to 5.6 billion. However, these austerity anti-crisis measures allowed us to increase salaries three times during the year. We increased salaries of public workers by 6.5% and teacher salaries up to 30% by September 1. (You know about this, as it was carried out on your instructions). Additionally, frankly speaking, the anti-crisis regime and economic austerity measures allowed us to increase the salaries of public workers again by 15% as of December 1, 2011. And of course, it worked.

Vladimir Putin: Good. Your support programme for large families is quite good. What do you think is the most important part of it?

Alexei Orlov: The most important aspect, I think, is the fact that we have gone even further than the federal initiatives announced in the President’s Address and stipulated in the law approved by the State Duma. We don't just provide free land, but also, regardless of age and income, a number of services. We draw up all necessary documents free of charge and at the expense of the republican budget. It is a substantial amount for a family budget…

Vladimir Putin: Documents for land?

Alexei Orlov: Yes, for land allocation. The average sum required in Kalmykia is 6,000-8,000 roubles. This is a significant amount for a family. But there is more to it than this, Mr Putin. The main thing is that we will, and we already are delivering infrastructure services to every door free of charge and at our own expense. Gas, water, electricity and sewage will be included in this package and will be funded by the republican budget.

Vladimir Putin: And an allowance in the amount of 30% of the housing and amenities payments?

Alexei Orlov: Definitely. We are certainly doing all this.

Vladimir Putin: This is meaningful assistance for large families.

Alexei Orlov: Additionally, the federal law mentions three children and more, but we took this even further, and four children and more will receive two plots of land, which is quite important. Surprisingly, the demographic situation is fortunately very good in the republic, so for young families in Kalmykia this is a serious motivation.

Vladimir Putin: You also provide monthly allowances for free food, don’t you?

Alexei Orlov: Yes.

Vladimir Putin: 500 roubles for a child, right?

Alexei Orlov: That's right.

Vladimir Putin: What about pre-school facilities?

Alexei Orlov: We are working on this, Mr Putin. But there are some difficulties. However, I have tasked myself and my colleagues in the government with resolving the problem with kindergartens within two or three years, at the most. Frankly speaking, we are currently going about solving this issue using halfway measures. But this is an important decision, especially for the villages. We open daycare groups on the basis of existing schools in regional centres and villages. They do not meet strict sanitary requirements, but they allow young mothers to keep their children occupied for some time so that they can go about their business. Of course, this is not a final solution. But it is a halfway measure. I repeat, Mr Putin, we plan to resolve the kindergarten issue completely within three years.

Vladimir Putin: Mr Orlov, you must build new kindergartens. New facilities must be built.

Alexei Orlov: Yes, they must. Mr Putin, you are aware of our situation. Unfortunately, we cannot afford much. I will repeat that despite the austerity budget we approved in 2011, we have fulfilled our social obligations in full.

Vladimir Putin: Good.