When drawing up a draft budget, both state and local, with the aim of equal distribution of finances among federal subjects, as well as between individual sectors of production and the national economy, regulation is applied. Its essence lies in the alignment of the supply systems of territorial or sectoral entities through the use of such forms as subsidies, grants, subventions and others. At the same time, the national government or local administrations must comply with minimum state standards.
The practice of distributing funds between budget funds of different levels or industries is widely used in the world. In the Russian Federation, more than 70% of financial regulation is allocated from regulatory revenues. What is a subsidy and what role does it play in the domestic economic policy of Russia, will be exhaustively explained by the Budget Code of the Russian Federation.
Forms of regulation
Among the budgets of different levels, funds are redistributed by providing irrevocable financial support in the form of the following main forms of regulation:
- subsidies;
- normative subsidies (transfers);
- subventions;
- subsidies;
- compensation.
The concept of subsidy
What is a grant? These are the funds that the state or local budget allocates to support unprofitable organizations and enterprises. Those whose sales revenue is less than the costs of production and sale of their products. As well as to lower budgets in order to cover the gap between their expenses and incomes. Thus, they compensate for the costs, cover the losses. The provision of subsidies helps to prevent bankruptcy and prevent excess prices for certain consumer services and goods. Part of the cost of these goods is paid from the budget. This is done through grants. Such an instrument in financial policy is widely used in states where administrative regulation of the economy is widespread.
What is an equalization subsidy
The equalization subsidy is an intergovernmental transfer. It aims to smooth out the object's profitable ability. Subsidies aimed at balancing the solvency of the subjects of the Russian Federation are taken into account as part of the general budget of the state. They are evenly or differentially distributed in accordance with the methodology of the government. Funds allocated from the budget for federal subsidies make up the Fund for Support of the Subjects of the Russian Federation. The following federal entities (regions) receive the largest amount of finance from this fund:
- Arkhangelskaya.
- Altai Territory.
- Amur.
- Astrakhan.
- Bryansk.
- Vladimirskaya.
- Volgograd.
Subsidies for citizens
What is a subsidy for the population, will help to understand a simple example. It is known that some of the citizens in terms of their incomes are below the level of accepted social standards. In order to maintain the financial security of this category of the population, the state can use subsidy mechanisms aimed at partially covering the payment for utilities, the cost of purchasing social goods and medicines, as well as benefits. Providing funds to citizens gives the state the opportunity to spend less money than when subsidizing production and services provided.
Main directions for using subsidies for the population
The most common types of subsidies for the population of the Russian Federation are:
- regulation of utility rates;
- compensation of fares for some categories of citizens;
- funding veterans' organizations and diverse societies for people with disabilities;
- housing subsidies.
