Subsidies as a universal form of government support of companies in the real sector: grounds for provision

Abstract

The subject of this research is the grounds for providing budget subsidies to the companies of the real sector. Assessment was conducted on the correlation between subsidies given to the real sector for stimulating their development, and subsidies given to the private companies for performing state functions, including in the social sphere. The basis for the analysis consists in data from the laws on federal budget over the recent years, as well as federal targeted investment program and state programs enacted for the purpose of developing separate economic sectors. It is demonstrated that majority of subsidies given to legal entities go to companies carrying out tasks and functions of the government. The subsidies that are given for the purpose of compensating expanses of private companies performing state regulation of prices (tariffs) or rendering budgetary services to the population, are not of incentivizing nature. As a result, the procedures aimed at improving efficiency of budget spending, including selection of recipients on a competition basis, as well as subsequent assessment of efficiency and results of spending of budgetary allocations are not applicable to this category of subsidies. It is also demonstrated that fiscal legislation does not account for differences in grounds for provision of subsidies, which leads to their utilization as a universal instrument for transfer of allocations form public to private sector – alternatives to state tasks, procurement, investments, and lending.