MOSCOW. (Valery Goreglyad for RIA Novosti) -- The initiatives to upgrade the living standards in Russia, made by President Vladimir Putin on September 5, amount to a long-term economic strategy. In the 21st century, an era of high technologies, it makes sense to invest in human capital.
Up to this day Russia has not done much to this end. Having given priority to health care, education, housing and agriculture in the budget for 2006-2008, the President has placed his bets on the development of human potential as an incentive of economic growth.
This is not a turn to the left but a thoroughly verified Right Liberal economic line that is consonant with the world trends. The President's initiatives will cost the budget $3,790,000 in 2006 alone. They are bound to increase the living standards of the population, provide orders for the Russian industry, and upgrade the consumer market. This is important because the growth of domestic consumption has become a major factor in the development of the Russian economy. In the last five years it has grown by 40%.
The financing of health care from the budget will go up by 64% - an unprecedented increase. By the year 2008 medical services provided by outpatient polyclinics will grow by 11%, and those in hospitals by 62%. While reforming the healthcare system, it is very important to upgrade the primary link because this will make it possible to consolidate all other links. The bulk of budget allocations will be spent on increasing salaries of district doctors (they will go up by $350 a month), general practitioners, and medical nurses (they will get $175 more), and on technical equipment of hospitals and clinics.
Medical equipment is largely worn out. A total of $508,772,000 is earmarked to provide new equipment for district polyclinics. The President said that 10,000 municipal polyclinics should receive new diagnostic equipment in the next two years. The ambulance service will receive new cars: 11,000 cars is a good order for the Russian car industry.
Today many patients requiring high-technology medical assistance are waiting for operations. The President said that the number of Russians who will have free surgical operations (at the expense of the budget) should increase by no less than four times over by the year 2008. Vladimir Putin said that it is necessary to make high technologies accessible primarily in heart and traumatic surgery, oncology, and particularly in the treatment of children. More money will go to the medical centers of the Ministry of Health Care and Social Development and the Russian Academy of Medical Sciences. The number of medical centers will grow, too. Particular attention will be paid to Siberia and the Far East, considering their bad demographic situation and the outflow of the population. Investment in the construction of health care facilities in 2006 will amount to $807,018,000, which is 290% more than in this year's budget.
There are plans to make the Russian pharmaceutics busy: the market is inundated with foreign medicines, many of which, for instance vaccines, can be produced in Russia.
Spending on education will grow by a significant 35% in 2006. All in all, $7,228 million will be earmarked for education. By 2008, 35% of the population aged between 15 and 34 will be involved in different programs of higher and secondary education. Internet will come to 87% of schools, as against 57% today. The government will spend $331,053,000 on 12 federal target-oriented educational programs. Lavish investment will be made in the construction of all sorts of educational establishments.
In housing the emphasis is on mortgage. Accessible housing is a headache for millions of Russians. So far only 7% of them can resort to mortgage. The figure for annual housing credits is supposed to reach at least one million by 2010. According to forecasts, mortgage will reach $4,105 million in 2006.
The budget will allocate $1,300 million for fundamental sciences, which spells an increase of 126.4%. Some $1,123 million (a 116.8% increase) will go into applied research. Scientists' salaries will have reached $1,053 a month in three years' time. But the funds can be used effectively only after thorough institutional reforms of science will be carried out. Wages of budget-dependent employees as a whole should go up by 50% in real terms. Other national priorities include the development of infrastructure, aviation and chemical industries, agriculture, and communications.
The economy must be able to cope with the scope of investment. In 2006-2008, the Investment Fund will have $7,473,684,000. In establishing such huge funds it is important to make sure that concentration of resources should not imbalance the indicators of macroeconomic stabilization. Besides, there should be clear-cut and realistic programs to finance. Effective use of investment is impossible without good management, something that the state is not providing for the time being. In 2006, expenses on human capital will amount to 48% of the deferral budget. These expenditures should be verified meticulously so that investment in human capital becomes a real factor of economic growth.
Valery Goreglyad, Ph.D. (Economics), is former First Vice-Speaker of the Federation Council (upper house of parliament), auditor of the Audit Chamber of the Russian Federation.
