The Regional Development Ministry will estimate the GRP from a new angle

During 2014 the Regional Development Ministry of the Russian Federation will for the first time estimate the impact of federal investments on the gross regional product of Russia’s territorial subjects, and will also estimate the impact of development institutes. The analysis will be carried out in virtue of the data of 2013.

The gross regional product (GRP) – is goods, works and services, made within the territory of particular subdivision of Federation. According to the head of the Regional Development Ministry Igor Slyunyaev, under GRP qualitative assessment it is necessary to give special priority to the real sector. It means to estimate the participation of the material production in the GRP (which goods are manufactured within the territory of the region, which plants were opened during the previous year).

The corresponding assessment has never been conducted until now, that is why it caused many contradictions. Thus, for instance, at year-end 2013 Russia exported the mineral resources and raw materials for a total amount of RUR 8,7 trillion. At the same time according to Russian Federal State Statistics Service, the largest region-exporter of raw materials and mineral resources in Russia is not Yakutia, as many people may think, but Moscow, due to the fact that the majority of tax payers are registered for tax purposes there. RUR 735 billion in terms of money of mineral extraction are accounted by for Moscow. But to what extent this figure reflects the state of affairs in Moscow economy, where the share of material production is extremely low, remains doubtful.

The head of the Regional Development Ministry also notes that only 9 territorial subjects of the RF out of 83 are donors, others are recipients. This trend is an alarming one, as it leads to decrease of the capital expenditure. Thus, the share of capital expenditure in consolidated budget as of the year-end 2012 amounted only to 11% (by comparison in 2007 – 24%). In Minister’s opinion, this indicator will amount 9% at the end of 2013.

The next major problem noted by Slyunyaev is the debt load of the regional budgets. As of year-end 2013 the joint debt volume of regional budgets amounted to RUR 1.45 trillion, that is five times more than it was in 2007. At the same time the consolidated revenues of regional budgets amounted to RUR 8.7 trillion.

Talking about the ways of solution of the current problems, the minister states, that in the first place it is significant to concentrate our attention on creation of the real economy sector in the field of the material production and capital investments. As it is the road construction of roads, bridges, utility lines, schools, hospitals, plants and factories, which give the most multiplicative effect. The overheads volume should be simultaneously decreased. At the year-end 2012 this indicator amounted to RUR 500 billion.

The second significant measure is revenue mobilization into the budget system and business output from the shade. According to Slyunyaev, one third of the national economy is out of tax liabilities at the moment and it doesn’t work for the budget system. For example, the land tax that generates budget revenue for regions is collected only on 50-60%. The Minister adds that the problem may be solved by virtue of simultaneous cadastral and tax registration having balanced cadastral, market and collateral value on land property and premises. Although corresponding measure is not popular, it is realized in many countries.

Thus, the key objectives that are set before the Regional Development Ministry are territorial and strategic planning on the basis of results obtained during investigation. More accurate estimates of GRP will help to avoid the mistakes in future when planning the budget and solving major economic problems.