Index - deflator is the main indicator for predictive planning

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:46

Despite the rejection of the planned economy in the nineties of the last century, the activities of most large enterprises and the state itself are still based on long-term plans and strategies. Since in the modern world everything is interdependent, and almost no one lives by subsistence farming, special deflators are used for more or less reliable forecasts - these are price indices for basic goods and services. These instruments are administered by the Ministry of Economic Development.

The concept of deflator indices of the Ministry of Economic Development

The Ministry of Economic Development develops its indicators, first of all, for the state. On their basis, strategic planning for the long term is carried out, medium-term plans, programs and forecasts for the development of both the Russian economy as a whole and its individual sectors are developed.

According to its content, the deflator is a coefficient that measures the valuation of goods and services in comparable terms.

In a more understandable language, when the deflator is applied in the calculations, prices are “cleared” from the inflation component and beginmore or less objectively reflect the real value of the conditional product, regardless of the year in which it was produced and how much the main costs of its production cost then.

Data sources for calculating deflators

The main sources of data for calculating deflators are, of course, various summary statistical reports. Organizations of all forms of ownership and individual entrepreneurs report annually in reporting forms to statistical agencies the main indicators related to their activities. The statistics processes these reports, consolidates them and submits them to the Ministry of Economic Development. Consolidated data for a number of years are used for reliable calculations and identification of dynamic trends.

Main deflators used in planning

The main deflators of the Ministry of Economic Development, which are used in the construction of plans, are usually considered:

• Consumer price index, which takes into account price changes due to inflation for food and non-food products and fuels and lubricants for paid services of housing and communal services and other enterprises.
• Producer price index, which takes into account the dynamics of producer prices in the context of various sectors of the economy. The industries related to energy, mining, processing, retail, construction and agriculture are covered in detail. Usually, the assessment is done in two versions: with and without the export component.
• Indices of changes in real wages and real incomesof the population, on the basis of which forecast calculations for the wage fund will then be built.
• Index of the ruble exchange rate against the dollar.

Deflator indices in budget planning

When drawing up draft budgets and medium-term financial plans of all levels, the forecast of the socio-economic development of the territory is taken as a basis. The calculation of the expected budget revenues is made based on the forecast data in accordance with the provisions of the Tax Code and other regulatory legal acts (decisions on setting rental rates, etc.).

The expenditure part of the budget is determined from the volume of adopted programs in accordance with the goals and objectives determined by the budget and tax policy for a certain period.

But when determining the amount of budgetary funds needed for the implementation of a particular program over a number of years, sectoral ministries and departments are guided by official indexes - deflators of the Ministry of Economic Development for years. With their application, the costs of maintaining property owned by the state, paying for utilities, and making necessary public purchases are estimated.

Indices-deflators in the real sector of the economy

The main scope of deflators is the public sector. Large enterprises use them selectively.

Schematically, it will look like this: planners always take into account that the price of steel will depend on the forecast dollar rate, they also determine the possibledemand and volumes of export and domestic earnings. After the deduction of mandatory payments, it becomes clear what real amount the enterprise will have to carry out its production activities. Comparison with the costs of the production process itself will allow you to assess the possible volume of investment in development and the need to attract borrowed funds.