Prime Minister Putin's speech at the State Duma:
* Pensions will grow 30% by year's end;
* Social tax increase postponed by a year;
* 12,000 roubles of maternity capital can be spent at mother's discretion;
* Army platoon commander will have a salary of 50,000 roubles.
The Prime Minister presented the Government's report to the Duma for the first time yesterday. The report plus the question and answer session took over two hours. Vladimir Putin said, among other things:
"We all know very well in what situation we are. The whole world economy, including the Russian economy, is living through hard times, to put it mildly. Reporting to Parliament on the results of the Government's work in these times would seem to be inopportune and an ungrateful business. However, I am glad to have this meeting because today we are starting a new tradition, the Government's report to the Russian Parliament. That is one more step forward in the development of our political system.
"People often ask whether Russia could have avoided the crisis and all its negative consequences: Of course not. It was simply not possible. This is an illusion.
"We are more successful in some areas than in others. But on the whole, the situation in the Russian economy does not differ from world trends. We actually had to counter two blows at once. The first was our own financial crisis which triggered an outflow of capital, and the second was a sharp fall in demand and consequently the prices for our exports.
"However, imagine what would have happened if Russia had entered the crisis burdened with the problems of several years ago: with a huge foreign debt, lots of payment arrears, massive arrears on wages, pensions and allowances and with rolling power cuts.
"Even today the quality of our market and social institutions leaves much to be desired. But what the crisis has undoubtedly shown is that they do work."
ON THE RESULTS OF THE YEAR
"In spite of the lower growth rate in the 4th quarter, the country's GDP increased by 5.6%. Industry grew by 2.1% and agriculture by more than 10%. Real wages increased by 10.3%. 64 million square metres of housing has been built. That is the best indicator in the whole history of the new Russia.
"2008 saw a breakthrough in access to the Internet in Russia. Already a third of the country, 50 million people, has direct access to the Web. In 2008, declared the Year of Family, 1,717,000 children were born, the highest number since the early 1990s. Life expectancy has reached nearly 68 years, an increase by 3 years over the past 5 years. 2,300 km of roads have been built."
ON THE ARMY'S NEEDS
"In 2009 defence spending will increase by 15% over 2008. A year ago, during a meeting with airmen in the city of Zhukovsky, I said the salary system in the Armed Forces should be updated. That mechanism was launched beginning in January of this year. 100 billion roubles have been earmarked for these purposes over the next three years. Already 34,000 officers from platoon to submarine commander have salaries of between 35,000 and 150,000 a month. That of course is only the first step. I believe that by 2012 the new system should be introduced for all servicemen. A platoon commander will be paid 50,000 roubles.
"Last year more than 22,000 flats were built or bought for servicemen. The target for the current year is 45,000 flats, double the previous year. That means that by the end of 2010 all servicemen and retired servicemen will be provided with housing."
ON BANKS
"The threat of the collapse of the banking system has receded, and yet it was dangerously close and very real. The banks which have received support managed to increase the financing of the real economy sector by 15% even in five crisis months. They issued an extra amount of more than 1 trillion roubles in loans. Financial institutions which did not receive support increased crediting by 7%. The average works out to 9%.
"I should remind you that the year before last, financing in this country had grown by a record 54%. Last year the growth was 34%. This is unprecedented in world economy. The highest rate of credit growth outside Russia is in China, and it is a mere 19%.
"I would like to stress that the Government has not been handing out any gifts. Private banks must pay off the credit."
ON THE EXCHANGE RATE OF THE ROUBLE
"We had to beat back the attacks on the rouble. We managed to stop a free fall of the rouble. The fall in the exchange rate of the rouble, inevitable under the current conditions, has been smooth, as we had promised. That enabled the economy and the citizens to adapt to the new realities. Besides, the current rate of the rouble undoubtedly bolsters the competitive potential of Russian producers. The growth rate for tariffs was reduced in the interests of the whole economy. At the same time a total freeze on tariffs is a spectacular but not always effective solution."
ON ANTI-CRISIS MEASURES
"2009 will be a very difficult year for us. We should not only be on the defensive, but we should attack, build a new and more efficient economy. This is the ideology behind the new draft budget. Its parameters are as follows: revenues - 6.7 trillion roubles, expenditure - 9.7 trillion. It can easily be deduced that we will have a deficit of 3 trillion roubles, or 7.4% of the GDP."
ON TAXES
"On possible transition to differentiated income tax rate. At present we have a flat 13% tax on the incomes of individuals. On the face of it, this is not very fair. Those who have big salaries pay 13% and those with low incomes also pay 13%. But we had stepped income tax rates before. What happened? People paid taxes on a minimum wage while the remainder was given to them in envelopes. But when we introduced the flat rate, proceeds increased 12 times over eight years. If we revert to the differentiated rate no justice will result. Payment will again go under the table. However, I am not saying that we will never do it."
ON CONSTRUCTION
"It will not be easy to maintain the current rate of housing construction: an unprecedented sum, 440 billion roubles, will be spent in 2009 to stimulate construction and other housing programmes. The 2008 figure was 249 billion. That sum amounts to a third of the entire housing market in the country..."
ON ENTREPRENEURSHIP
"The decisions already made introduce serious restrictions on audits as of July 1, 2009. True, I cannot understand why the starting date is July 1. Apparently there is an explanation, but we shall see whether it can be speeded up.
"Many countries with developed economies treat the violation of anti-monopoly legislation as a crime. Here it is excessively liberal and ineffective. Our proposal will substantially toughen the sanctions. Please do not delay the passing of this law...
"Alternative forms of trade should be developed so that people have a choice: not only huge supermarket chains, but also weekend fairs, local shops and so on."
ON "FAT CATS"
"The anti-crisis plan earmarks 255 billion roubles to support the banking sector. Government support will be closely tied with the financing of the real economy sector. I want to ask you when you debate the budget, not to be too harsh on the bankers. You can call them what you like and insult them - ‘fat cats', etc. Nevertheless, it is an important sector of the Russian economy. We should approach this matter very carefully and seriously, avoiding name calling... The banking system must be cleansed of problem lending institutions."
ON INFLATION
"... The rouble has been stabilised. There are grounds for believing that inflation too will decrease. That means that we can expect the Central Bank to lower its interest rate in the coming months. Our plan includes an ambitious programme to cut the deficit to 3% of the GDP as early as 2011. The Ministry of Economic Development has adopted a benchmark that will bring inflation to 8% over three years. We might try and see if it can be done sooner..."
ON ASSISTANCE
"The question of helping small and medium-sized enterprises... Possible support measures include easy-term rent, lower utility rates , Government procurement quotas... Let me remind you that we allocated 10.5 billion for these purposes plus 30 billion roubles in loans.
"Support of the regions, under the new draft budget, increases by 36% over 2008. Regional budgets too will face problems. We must help them. We have earmarked 1.2 trillion roubles for these purposes."
ON JOBS
"Our task is to prevent the crisis from demoralising society, from ruining people's long-term plans. Overall we earmarked 600 billion roubles for social needs. The draft budget also has a special reserve in the amount of 125 billion roubles. An employment programme has been launched. Almost a million temporary jobs will be created. More than 170,000 persons can be retrained for new occupations. 57,000 people will get Government assistance in starting their own businesses."
ON MATERNITY CAPITAL
"Beginning in 2009 we have an opportunity to direct maternity capital towards repaying mortgage loans. More than 80,000 families will be able to avail themselves of that opportunity. I propose that people be allowed to receive lump sums of 12,000 roubles in 2009."
ON PENSIONS
"Real pensions increased by 18.5% last year. The labour pension in nominal terms will increase by more than 24% this year. The average size of the social pension will reach a pensioner's living minimum. For this purpose we will raise pensions by more than 30% in December. I believe that as planned, starting January 1, 2010 the pension rights acquired before 2002 should be indexed by a further 10% plus 1% of additional indexation for each year of seniority earned in Soviet times."
ON RESERVES
"The world crisis is far from over. We cannot solve all the problems in one stroke, at one snap of the fingers...
"Just yesterday the President of the Central Bank told me that they bought five billion dollars recently. Gold and currency reserves are growing and now stand at $380 billion. It would be irresponsible to console ourselves by glib assumptions and unbridled optimism. But one thing can and must be said: Russia will overcome the crisis."
You can read Mr Putin's concluding remarks on p.4
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PUTINISMS
As always, this newspaper has picked vivid expressions and improvised aphorisms from Vladimir Putin's speech. Below, a selection:
* "Please, when you discuss the budget, do not be too harsh on the bankers. You can call them what you like, ‘fat cats' and so on. But let us avoid name calling."
* "The whole world envies us. You can take my word for it." (on the 13% income tax).
*"We will have a surrealist nightmare if the balance between social justice and economic expediency is upset."
* "The main thing is that there should be light at the end of the tunnel. I think that the programmes presented to you represent such a light."
* "We cannot turn the whole country into a social security agency."
* "We cannot solve all the problems with one stroke, with one snap of the fingers."
* "Everyone wants to be kind, too kind perhaps, but such ‘kindness' contradicts national interests."
* "You could post a policeman there; gas will go on being stolen".