Grants are a necessary element of modern Russian politics. It is received by regions, manufacturers, citizens. On the one hand, subsidy is a way to eliminate inequality. But on the other - the best method to increase inflation. Why this happens and what types of subsidies exist, we will describe below.
What is a subsidy?
The word "subsidy" originates, like many other generally accepted terms, in the Latin language. According to the etymology of the word, a subsidy is a gift or a donation. In economic studies, a subsidy is a financial donation that does not imply a return or intended use. It is aimed at paying off current or long-term debts, as well as stabilizing the financial condition of the recipient.
The investor is usually a budget that is more global in nature. In Russia, the federal budget is such a “donor" for the regional treasury.
Kinds
Based on the category to which the "recipient" belongs, the following types of subsidies are distinguished:
- Transfer of financial assets from the treasury of federal significance to the treasury of the region - inter-budget transfers.
- The provision of financial assistance to enterprises, which is of global importance for the country's economy, if the organization’s income is not able to cover the current costs of production and sale of products.
- Financial support for that part of the population, which for a certain period of time does not have the physical or moral strength to independently cover expenses.
Intergovernmental transfers
The conditions for the provision of municipal subsidies are determined by the Budget Code of the Russian Federation. It also focuses on a single methodology, according to which cash infusions are dispersed across needy regions.
From the federal budget, funds are sent to the treasury of regional significance for:
- establishing a balance of regional budgets;
- cover current expenses of a primary and secondary nature.
Why is this needed?
Subsidies aimed at ensuring the balance of the regional treasury are paid in case of a change in obligations on expenses and income. In this case, half of the required amount is established by legislative act, and the second part is submitted for discussion to the commission, which consists of deputies of the State Duma.
Financial contributions can be sent to the constituent entities of the Russian Federation not only in case of stabilization of the economic situation as a whole. They can also be aimed at the implementation of Presidential Decrees and other resolutions, which are national in nature.
Benefits of the second type are provided to equalize the socio-economic situation of individual regions. Due to the existing weather and climate conditions, the distribution of industrial enterprises and other reasons, there are inequalities in the life of administrative districts. To eliminate inequalities, financial support is sent to entities from the national treasury. In this case, the distribution of subsidies also occurs within the framework of the code.
Subsidies to manufacturers
As mentioned above, payments that are not targeted, have the right to receive not only regions, but also sectors of the economy or individual producers. Thanks to financial assistance from the state, enterprises are able to pay off additional costs incurred as a result of the revision of the Tax Code, electricity and fuel prices, etc.
Grants are addressed to those industries whose products are included in the subsistence minimum list, or in the case of a priority area of industrial development, which is of great importance both for the region and for the country as a whole.
It often happens that an enterprise is forced to produce products, as this is required by social policy. Accordingly, the price of products is set depending on the purchasing power of the population. This leads to the fact that the company is not able to introduce a raising factor and the profitability of production is reduced. To maintain production afloat, the state sends financial assistance, thereby leveling out possible discontent.
As an example of such enterprises, housing and utilities, socio-cultural, and national economies can be cited.
However, it is absolutely wrong to consider financial injections of this kind a cure for all diseases. The constant subsidization of large manufacturers increases the burden on the federal and regional budgets. Prolonged injections, as a rule, lead to an increase in inflation. It is for this reason that many experts agree that it is necessary to rely on the updating of production assets, the use of new technologies, and the general increase in the investment attractiveness of the business. It is noteworthy that in developed European countries such a concept as "subsidy" is an underused term. Financial injections from the state are not provided, in this regard, business relies only on its own forces, thereby achieving great success.
Help to the population
Individual citizens living on the territory of the Russian Federation also have the right to subsidies if an individual can confirm their involvement in one of the privileged groups with relevant documents and certificates. However, there are a number of restrictions on receiving social subsidies. For example, if you want to buy an apartment, then the subsidy will be paid if the housing meets the standards of social housing in the region of residence. That is, you are unlikely to receive a subsidy for a two-level apartment in the city center with a personal security system and parking.
Also, as a financial aid to employees, an enterprise can provide a social package that allows an employee not to spend extra money on food, cover travel expenses to and from work, to his home, and to support children under the age of majority. Such kind of subsidies are fixed in the employment contract of the employee.
Students and retirees
In addition, additional payments in higher educational institutions have become very widespread. The university determines the number of scholarship holders who are entitled to receive subsidies when providing relevant certificates. These students include:
- students with a disability;
- persons who have lost one or two parents;
- living in large families.
Financial assistance is provided throughout the entire period of study.
Also, social subsidy may be a pension subsidy. Pensioners who:
- does not work;
- live below the cost of living;
- have a disability.