Despite the general impression of commentators that this time the presidential address to the Federal Assembly was dedicated to political issues, on closer examination it is clear that Putin rightly announced the ways to solve the economic and social problems. The main message of the president was that we should not expect miracles, but we must develop the economy, based on current conditions. President urged to be prepared for the fact that the period of low commodity prices and, possibly, external limitations could last a long time. "By changing nothing, we will simply eat our reserves, and economic growth rates will fluctuate somewhere at ground level," Putin said, identifying five key areas for development.
First. Competitive production is still concentrated in the commodity and mining sectors. Just by changing the structure of the economy, we can solve major problems ... We have successful businesses in industry, agriculture, small and medium-sized businesses. The task is the number of such companies to grow rapidly, and in all sectors. To achieve this goal we should focus on our programs of import substitution and export support, technological renovation of production facilities and training of professional personnel.
Secondly. A number of industries is at risk. These are primarily the construction, automotive, light industry and railway engineering industries. The government should provide special support programs for them. Financial resources are provided for this purpose.
Thirdly. It is necessary to support people on low incomes, the most vulnerable categories of citizens, finally, to go to the fair principle of social assistance, when it is given to those who really need it.
Fourthly. We need to achieve a balanced budget. This is an essential condition of macroeconomic stability and financial independence. As a result of the federal budget in 2016 the deficit should not exceed 3%, even though revenues will be lower than expected. Each budget cycle must begin with a clear fixation of priorities, should be returned to the decisive role of the government programs in the process. It is essential to strengthen control over the movement of public funds, including federal and regional subsidies to enterprises in industry and agriculture. They need to be listed to the final recipient only through the treasury bills. The state revenues must not go, as it is said, bypassing the cashbox. Due to the ‘gray’ schemes for the payment of customs duties, excise taxes on alcohol, tobacco, fuels and lubricants, the budget annually loses hundreds of billions of rubles. This is outright theft. Putin also proposed the formation of a single, coherent system for the tax administration, customs and other fiscal charges."
Fifthly. We must continue to build trust between the government and business, to improve the business climate in the country. During 2014 the investigating authorities filed nearly 200 thousand criminal cases of so-called economic compositions. 46 thousand from 200 thousand reached trial, 15 thousand cases collapsed in court. It turns out that only 15% of cases ended in a sentence. The vast majority, 83% of businesses on which the criminal cases were filed, lost business fully or partially. So they were pressed, robbed and then released. And it's certainly not what we need in terms of the business climate. This is the direct destruction of the business climate.
Last year an amnesty on capital returning to Russia was announced. Meanwhile, business is not in a hurry to take advantage of this opportunity, which means that the proposed procedure is complicated, there are not enough guarantees. Putin proposed the creation of an Agency for Technological Development, which will provide assistance to enterprises in the acquisition of domestic and foreign patents and licenses of engineering services. Access to foreign markets, the expansion of Russian production should be a natural development of the national strategy of the business, the entire Russian economy, the president said.
With regard to agriculture, in the past year Russian exports of agricultural products amounted to almost $20 billion. This is a quarter more than the proceeds from the sale of arms, or about a third of revenues from gas exports. Putin considers it necessary to put into circulation millions of hectares of arable land, which is now idle and in the hands of large landowners, and many of them are in no hurry to use the resource. The President also proposed to withdraw lands from the unscrupulous owners of agricultural land, which are used for other purposes, and to sell them at auction to those who want and are able to cultivate the land.
Zyuganov has the impression that "the president's message and concrete proposals, orders to the legislative authorities and the government are one thing, but the real policy of the government is completely different. After careful consideration of the message, the government should appeal to the State Duma with a request to return the budget in the second reading and strengthen the unit, which aims to develop our science, scientific and technological progress and the industry."
The leader of the Communist Party believes that the policy of the fight against terrorism is carried out consistently and rigorously, but it is necessary to reinforce the essential contribution to the defense industry: "All that you see in the sky and on the ground, it is mainly the product of the Soviet era. There are a number of innovative solutions, but they require long investment. The new budget has not so many of these allocations, we will have to review this article as well."
"Overall, the economic bloc smells like a liberal line, but in this way it will be impossible for the country to get out from the crisis. We have a package of proposals, how to increase the budget to 25 trillion rubles. So I talked to the members of the Federation Council, many are willing to vote for our proposal of the introduction of the state monopoly on alcohol-vodka products. We would have a huge increase simultaneously. It is possible to carry out the country's referendum on the nationalization of the mineral resources base, it could be an extra help. And in general, to increase the efficiency of all government services ranging from customs, finishing with the prosecutor's office. A progressive tax could be introduced tomorrow. We have proposed introducing a tax for 1 million people who earn big money. We have a stratification of the population – the richest 10% own 80% of the wealth of the country. There is no such separation even in the USA. If we carry this message of the president, we must urgently take four or five laws. Without this, to perform such a volumetric and principle message will be impossible," Zyuganov summed up.
The head of ‘Business Russia’, Alexey Repik, commenting on the president's message, said that the Russian economy is dependent on the world market and the price of raw materials – oil, gas, metals. "We are not accustomed to the fact that foreign policy may have a negative impact on the economy as well, for example, through the sanctions regime the limited access of Russian companies to financial resources. Of course, this still has an important influence on the economy and on the lives of each of us. But if, in the past year, many were panicking that the economy and business and companies would go into free fall, consumer demand would disappear, loans would get very expensive and no one could take advantage of them, but now we see that in the first 9 months the profits of the large Russian companies even grew. Now it is important that this begins to be re-invested in the creation of new jobs, in the creation of competitive enterprises, and do not go the usual way in the offshore jurisdictions. It is necessary to restore investor’s confidence, to return to the trend of investment growth."
According to Repik, "the president was able to identify all that is important not only for public policy, but for every Russian. The beginning of the message was in line with the heart and spirit of every Russian, where it was stressed that we will fight against any manifestations of terrorist pressure. Those who will contribute to this pressure will not go unpunished. Against this background the social and economic agenda was stressed a little less. But in order to be able to answer those calls, which the president noted at the beginning of his message, Russia should be economically strong and socially secure. This can be implemented much more effectively if we solve one of our main Russian troubles – corruption – which the President also clearly and specifically expressed now. It is important to give freedom to the economy, an environment for businessmen, to help Russian companies become more competitive, especially non-primary ones, and this competitiveness should not be far-fetched, when we persuade Russian consumers to buy Russian products, even through the import substitution program. No, the products must be competitive. Such enterprises should be supported, including through the work of the Development Fund for Industry (EDF), which will be additionally de-capitalized for 20 billion rubles."
Alexey Repik considers it important that these companies possess the best available technologies, "If we do have them in Russia, so it is necessary to buy licenses, rights to the technology abroad. For this purpose a special institute of the Agency for Technological Development will be created, which the President spoke about today. It is important that the format of success to become the output of Russian products to foreign markets. That is, so there is an economic expansion of Russian goods, which adds strength and importance to us, as for the state. It is necessary that the Russian economy and business do everything necessary for Russia to be strong."
Responding to the question about how the Western sanctions impacted on the Russian economy, Repik said: "Everyone understands that the sanctions are a bad thing. It is understood by both Russians and our colleagues abroad. The sanctions on business are an element of pressure. Communicating with our international partners and colleagues, we often hear that if the sanctions continue, they will begin to experience serious discomfort and serious problems in terms of their economies. This is especially true for those countries that were initially our great partners – Germany, Italy. It is less for the United States, with which we had a lot less trade and investment turnover. We should not wait for fast decisions on the lifting of the sanctions, but I do not think we will see a worsening of the situation in this matter. Russia is really interested in international cooperation, the president of the Russian Federation spoke about this today. It is not only the support of international companies and investors working in Russia, but that are our efforts to create a single anti-terrorist center, an extreme force fist, when only together will we be able to cope with terrorism. The countries that have announced the sanctions understand that without Russia it would not do this job successfully, quickly and in time. I think that common sense will prevail, and the sanctions will begin to recede into the past."
