Transcript of the beginning of the meeting:

Vladimir Putin: Dear colleagues, we are opening this meeting with sad news. Mr Alexei Kochetkov of national television Channel One has just died at his workplace in the Government House. He had covered federal government work for several years.

Please pay tribute to his memory by standing.

Thank you.

He had a heart attack, according to first-hand reports. Doctors could not do anything. He was working only minutes earlier.

Let us begin with the most important reports. Preliminary analyses of compliance with the federal budget are ready for January.

Mr Kudrin, you have the floor.

Alexei Kudrin: Mr Putin, esteemed colleagues,

January budget revenues reached 737.6 billion roubles, 34.4 billion less than in January 2009. Oil and gas revenues, on the other hand, were 294 billion: 115 billion more than last year, mainly because the average petroleum price was $73 versus $39 in January 2009. Other revenue was less, 149 billion. We have not yet achieved last year's results for January.

Expenses totalled 671 billion roubles, exceeding last year's. The ministries are more active this year than at the beginning of the preceding year as they transfer allocations to subordinate agencies, arrange tenders and make contracts.

That was why January's expenditures exceeded those of January 2009 by 275 billion roubles.

The budget surplus was 66 billion roubles, so revenues exceed expenses, for the time being, though January expenses are always less than the average monthly expenses throughout the year.

We have been very active in drafting and passing the relevant bylaws. Thanks to this, the ministries and agencies have not received a mere 22.9 billion roubles in earmarked allocations, which adds up to only several hundredths of a percent of the total. Meanwhile, the ministries and agencies have passed down 54% of their allocations to subordinate agencies.

Not all the funds have made their way to the corporate level, so tenders had to be delayed. Contracts, however, have been signed on 32.7% of the total. The Ministry of Industry and Trade deserves special mention as it has completed contracts on 74.5% of its planned expenditures. The Ministry of Natural Resources has completed 66.4%. The Ministry of Transport is not bad in this respect, with 44.5%, though it has bloated expenditures, of which I have made special mention today.

This task is more active than usual. It is too early now, however, to forecast the revenue/expense correlation for the whole year. Thank you.

Vladimir Putin: Thank you. We have adopted a new procedure for the government regulation of food and cosmetics security.

Mr Zubkov, please explain the essence of these decisions and explain how security will be maintained.

Viktor Zubkov: Mr Putin, esteemed colleagues,

Really, the government executive order which you signed on December 1 is within the framework of the overall government programme to reduce the administrative requirements for business and eliminate the redundancy of supervisory and other departmental duties.

In compliance with this executive order, a process for the declaration of conformity was introduced yesterday concerning a wide range of products, including foodstuffs, cosmetics, alcoholic beverages, soft drinks, and so on. Certification remains valid for many other products with a general fifty-fifty correlation. That is, for every fifty items complying with the conformity declaration process another fifty will be certified.

Let us look at some of the practical aspects of implementing the executive order. The programme will relieve business of the requirement to apply to private laboratories for certification, a process that has proved its ineffectiveness. This has been nothing but a costly confirmation of previous expertise by Rospotrebnadzor. A majority of laboratories and centres which issued so-called certification merely collected money from their clients and printed out certificates to create the undeserved impression that something was done.

There are about 400 such laboratories to certify milk alone, and several thousand for the entire food industry.

Big money is collected from producers. Now, these companies can use the money to expand and modernise production, which will improve the quality of their products, in the final analysis. However, certain aspects of this worry the business community and demand our attention.

First of all, these apprehensions concern the continuing validity of the previously issued conformity certificates. They will remain valid for their entire term, be it a year, three years or five. The Customs Service and Rospotrebnadzor have circulated the relevant notices to this effect. I checked on it today.

Second, there will be a conflict in using previously printed labels. There are options available to settle the problem, and I think we will settle it in a way that businesses will suffer the smallest possible loss.

As we can see, the government is retaining its rights in regulating foodstuffs and other products with this programme. I want to stress that consumer protection from substandard products will not decline.

Rospotrebnadzor will maintain its current process for quality control. Moreover, we will take further measures to improve quality inspections this year. This concerns mainly foodstuffs.

Technical regulations for food safety will soon be defined for the quality and safety indices of every category of foodstuffs.

Amendments to the Code of Administrative Misdemeanours are being drafted. Some misdemeanours envisage the smallest possible fines: from 500 to 10,000 roubles for private enterprise and up to 50,000 for companies. We have given business ample elbowroom but we will increase fines if they do not comply. The Ministry of Industry and Trade is drafting code amendments to increase fines tenfold, from 5,000 to 500,000 roubles. We expect these amendments to be adopted before April 1.

Vladimir Putin: You mean the Code of Administrative Misdemeanours?

Viktor Zubkov: Yes.

Vladimir Putin: Okay, continue to work on it. And please report as soon as the job is over.

Viktor Zubkov: We will.

Vladimir Putin: The volume of freight transportation increased 30% in January over January 2009. What do you think about the trend, Mr Levitin? What was the situation in January, and is the trend continuing?

Igor Levitin: Mr Putin, esteemed colleagues,

The freight revenue from commercial transport grew 5% in January, according to preliminary estimates. Railway revenue was up 16%, and motor vehicle transport revenue up 17%. Air cargo is coming back into its own. It increased 35% in January over January 2009.

Marine transport is steady, up 10%. Cargo transhipments increased 9% to 40 million tonnes: 15 million tonnes in dry cargo and 25 million in bulk cargo.

Passenger traffic grew 2%. Railway and motorway passenger transport has not fully recovered yet while air transport increased 30% in January over January 2009.

I'd also like to report that we announced a tender for a license to operate flights for passengers under 23 and over 60 from the Russian Far East. Almost all the airlines have filed participation applications; we are finishing receiving bids. We expect traffic to double in these categories. We will give priority to Russian airlines.

Vladimir Putin: Good. We mentioned positive demographic trends. Final figures are ready. The birth rate grew 2.9%, if I'm not mistaken; mortality rates dropped 3%, and the natural decline in the population fell 31%. Ms Golikova, what can you add to this?
Tatyana Golikova: Mr Prime Minister, ladies and gentlemen, our ministry and the Federal Service for State Statistics have almost compiled the final figures for the birth and mortality rates. The only statistic unavailable yet, urgent migration, will be received in late March; this data is collected later.

You are correct in saying that birth rates rose 2.9%, mortality rates dropped 3%, and the natural decline in the population decreased by 31.1%. Also, the infant mortality rate decreased by 3.5%.

Vladimir Putin: What was the decrease?

Tatyana Golikova: It was 3.5%, or 8.2 deaths per 1,000 live births. In terms of general trends within Russia, a natural increase was registered in 35 regions in 2009, as opposed to 21 regions in 2008. This year the Krasnoyarsk Territory, the Republic of Bashkortostan, the Republic of Udmurtia and the Tomsk Region joint the group of regions with a registered natural population increase.

A positive dynamic was sustained in every area of the national project. I am referring primarily to the declining number of deaths caused by cardiovascular diseases, which declined 4.6% in 2009.
The number of deaths caused by motor vehicle accidents dropped 14.8%. The number of deaths due to tuberculosis fell 7.8% for the first time in many years. In addition, the number of deaths caused by accidental alcohol intoxication fell 32%.
There is a steady decline in the numbers of deaths from other causes that are monitored by our ministry and the Federal Service for State Statistics.

The only exception is oncology. The number of cancer related deaths rose 0.9% in 2009. There are two reasons for this.
First, diagnostics methods have improved, which is good. A total of 2,200 people were diagnosed with an oncologic disease during their annual medical examinations in 2009 alone. These were normal, able-bodied people, who didn't suspect a problem.
Second, we introduced a support programme for people with oncologic diseases in 2009; we'll be able to review its effectiveness in the first quarter of 2010.

However, I should note that there was a decrease in the number of oncologic cases in the Tyumen and Penza Regions.
I would like to say a few words about immigration. According to preliminary statistics, the immigration increase is estimated at 247,000-250,000 people. If this data is confirmed or if the increase is higher, which could be explained by urgent migration, we will state either no change in the number of the resident population in the Russian Federation as of January 1, 2010, or a slight growth by up to 20,000, relative to January 1, 2009.

Vladimir Putin: Good. Thank you.

Let us move on to today's agenda.

I have emphasised more than once that this year our task is to accelerate the work on the projects connected with the modernisation of the economy, social services and public administration.

The government will need to follow through on the competitiveness development programme, continue technical regulation reform and create additional incentives to promote innovation. We must focus on the issues that will make our economy more stable, efficient and competitive. One of the key priorities here is energy conservation.

I would like to remind you that a related law was passed late last year, followed by a comprehensive government action plan. We are facing an ambitious challenge to reduce the energy intensity of the Russian GDP by at least 40% by 2020.

The need for a transition to a proactive energy conservation policy is obvious to everybody. First of all, it allows for economising. The public, the state budget and Russian companies can pay less for heat and electricity without compromising service quality.
Most importantly, the energy conservation policy results in a substantial quality upgrade, improves the structure of the economy, urges companies to upgrade production facilities, creates a big market for high-tech commodities and services as well as thousands of high-skilled and high-paid jobs.

Energy-efficient solutions greatly contribute to improving the environment, making life more convenient.

Ultimately, only the rational consumption of energy resources will allow us to avoid their deficit and other related problems, including the difficulties of connecting new facilities to power grids and the unjustified increase in prices and corruption.

We have to admit that we didn't seriously address these issues in previous years. A lot of successful projects have been implemented in this area since 2000, but these are disparate and targeted projects in specific municipalities, regions or companies.
This is not enough today. Those who develop energy efficient solutions must be assisted by the federal government.

The regulatory base will need to be updated, with new rules and standards adopted. Government agencies, regional and municipal authorities must develop and implement pilot projects and programmes to apply energy-efficient technology.

The main point is to change the attitude towards using energy; a responsible and rational approach to natural resource consumption must be developed.

This is why we must build an integrated and efficient administration system, outline the responsibilities of federal executive bodies in energy conservation issues and enhancing the energy efficiency of the entire Russian economy, and specify the government officers who will bear personal responsibility for these plans.

The Ministry of Economic Development has drafted the pertinent proposals, which we will review today. Let us start with them.