OREANDA-NEWS. June 03, 2010. In his opening remarks, the prime minister said "we should work to create conditions for even greater economic growth, growth of 4% or more. We need to make up for the losses we suffered during the financial downturn. Qualitative changes, increased investment and higher labour productivity should underlie these positive trends, instead of just pumping up the size of the economy." In addition, Vladimir Putin suggested that an additional 10 billion roubles should be set aside to continue the car scrappage programme intended to support the automobile industry this year.

Vladimir Putin's opening remarks:

Good afternoon, ladies and gentlemen. Today we will continue our discussion of a series of issues that we have spent quite a lot of time on recently, including numerous meetings with business representatives as well as trade unions and deputies in the State Duma.

We're talking about the most important piece of economic legislation in the country for the next year, as well as various growth scenarios for the Russian economy from 2011 to 2013. Allow me to cite some key parameters that we will use to formulate the budget.

According to conservative estimates, GDP should increase by 3.4%. Of course, we should work to create conditions for even greater economic growth, growth of 4% or more. We need to make up for the losses we suffered during the financial downturn. Qualitative changes, increased investment and higher labour productivity should underlie these positive trends, instead of just pumping up the size of the economy. Accordingly, we project investment will increase by 8.8% and labour productivity by 3.3%.

Another major goal for the next three years is to gradually reduce inflation to between 5% and 7% per year. To achieve this, we have decided to substantially limit price increases for natural monopolies. For example, the cost of transporting freight by railway will increase by approximately 12.5% this year, and by no more than 8% next year.

Natural gas prices will increase 26.5% this year and only 15% in 2011. Electricity prices will increase by less than 13% to 15%, even despite our plans to liberalise the market. This is less than the projected increase of 17% for 2010.

Everything I've just said pertains to industrial facilities. Any government of any country would be happy to freeze prices and limit price increases for the general populace to zero.

However, this is almost impossible in a modern economy, and the Russian economy is no exception. In places where they have attempted to do this, and there are such countries, they found that it quickly leads to economic stagnation and the collapse of specific industries, which adversely affects people's incomes and quality of life.

In most economically developed countries, including in the United States and the European Union, ordinary people pay 50% or 100% more for natural gas and electricity than what important economic entities and industrial facilities pay. In this country, where incomes are modest but inflation is still high, we will continue this practice of keeping prices for ordinary people substantially lower than those for important economic entities and industrial facilities.

We will have to continue this practice for some time, especially amid the financial downturn. Meanwhile, federal, regional and municipal officials will have to introduce new, modern methods for overseeing these processes, including in the housing and public utilities sector. These methods should be based on economically sound mechanisms, and take into account people's incomes and inflation.

Furthermore, due to the steady economic recovery, we must ensure that we improve the overall social situation, help increase people's overall incomes and gradually decrease the number of unemployed.

We also expect positive demographic trends to gain momentum so that the population will stabilise and continue to increase gradually.

I would like to emphasise once again that the forecast for economic development can only be realised if government administration becomes significantly more efficient and if the government takes more active measures to undertake major structural reforms, improve the investment climate, foster competition, decrease the energy intensity of the national economy, rebuild infrastructure and modernise healthcare and other social services.

Another issue on the agenda is the bill making it possible to use maternity capital funds more broadly. This decision was announced in the government's report to the State Duma. We now need to codify it into law.

First, there is a proposal to extend the material assistance to the public through the maternity capital funds. Just like last year, parents will be able to receive 12,000 roubles in cash.

Second, it will be possible to spend maternity capital on the construction of a private home, even if a family builds the house themselves, without contracting a construction company.

We will also consider draft technical regulations setting mandatory requirements for railway transport facilities.

After the tragedy on the Nevsky Express train, I instructed Russian Railways to pay closer attention to safety issues.

Naturally, we need to build a system that will eliminate any possibility of terrorist attack or illegal interference with the operation of railway transport. And it goes without saying that this issue can only be settled through active and productive cooperation between law enforcement agencies and security services.

No less important are technical requirements for passenger carriages. No passenger carriages with unresolved safety issues or carriages that fail to meet the strictest safety regulations should be allowed to be used, because the threat to people's lives and health should be minimised even if there is some sort of accident.

Another issue the new technical regulations will address is establishing a legal framework for introducing high-speed passenger service so that in the future administrative barriers do not hamper the design and construction of new lines.

As you know, in addition to the line from Moscow to St. Petersburg, high-speed trains will start running between Moscow and Nizhny Novgorod, St. Petersburg and Helsinki and, in the future, in other areas, for example to and from Smolensk, which will allow us to establish a high-speed railway connection with our major European partners. I have also instructed those responsible to look into the possibility of bringing high-speed rail to Siberia.

There is another issue we need to address. As you know, the number of Russian citizens travelling abroad continues to increase. We are working hard to make administrative procedures for crossing the border as simple as possible and to complete a transition to visa-free travel regulations with most of our partner countries.

Naturally, Russian citizens should feel safe when they are abroad. They should know that if they are in need, the government will always be there to help and provide legal, consular and any other assistance in force majeure circumstances.

I would like to add that the government of the Russian Federation has signed a resolution establishing the procedure for providing financial assistance to Russian citizens for returning to Russia if they are stranded abroad due to extraordinary conditions without means of support.

One more thing I wanted to mention in my opening remarks: you know that yesterday we discussed formulating the budget for 2011 and amending the budget for 2010 in great detail. In this respect, I would like to draw your attention to a programme that was launched this year and has operated very efficiently. I'm talking about the automobile scrappage programme.

There are certain administrative issues, but in general the programme is working efficiently and is an effective tool for supporting the automotive industry. The 10.5 billion roubles we set aside for this programme this year are being spent. Considering the positive impact of the programme, I believe it is necessary to allocate 10 billion roubles in additional funding for this programme this year, and I ask you to submit proposals for smoothly wrapping up the programme next year. This should be a smooth transition!

Let's get down to work.