Maintaining macroeconomic stability and balancing the budget are key areas for Russia's economic development in the next two years, Russian Prime Minister Vladimir Putin said on Tuesday.
"The basic conditions for future development are responsible macroeconomic policies and a balanced budget. We can't afford to live with a constant budget deficit of 6% [of GDP]. Otherwise, we'll find ourselves in a debt trap," he said in an annual address to the country's lower house of parliament.
Putin said the government intended to return the stable growth to the economy, take measures to build new industrial potential and support innovation.
"Perhaps the main thing is the qualitative development of sectors oriented to people," Putin said.
The prime minister said the government intended to reduce the budget deficit to 3% of GDP by 2012, eventually returning to a deficit-free budget that would allow the country to rebuild its international reserves.
RECESSION OVER
Putin said the Russian economy, hit hard by the 2008 global economic crisis, has moved out of recession and begun to recover.
"Since July last year, the Russian economy has been demonstrating ever more confident signs of recovery," Putin said.
He said the Russian economy's performance in the first quarter of 2010 inspired optimism.
"Industrial production grew 5.8% and real household incomes 7.4% in the first quarter," Putin said, adding that the Russian economy was expected to expand 3.1% in 2010 but it was highly probable that growth would be greater than this official forecast.
NO RE-NATIONALIZATION, GREATER FREEDOM OF ENTERPRISE
The state should not increase its presence in the economy and should remove obstacles to the development of free enterprise in the country, Putin said.
"It is difficult to speak about freedom of enterprise when some market sectors are practically closed to it and are artificially monopolized by state companies," Putin said, adding that the government did not go down the nationalization route during the crisis and did not intend to now.
"I believe any proposal on the acquisition of new assets, both for state ownership and ownership by state companies must undergo special treatment ... to avoid total re-nationalization," he said.
POINTS OF GROWTH
Russia's car industry is gradually recovering from the global economic crisis, Putin said.
The Russian car industry, which is a significant employer in the country, was severely hit by the crisis last year. The ailing Russian car giant AvtoVAZ was hit hardest, with sales plummeting due to reduced demand and consumer preferences for higher quality foreign cars.
"Car production volumes are again on the rise. The car industry is recovering just like other sectors of our economy," Putin said.
EASIER TERMS FOR BUSINESS STARTUPS
Russia will completely cancel requirements for business startups to apply for state approval, Putin said.
He said 20 types of businesses were currently allowed to start operations without state approval, but the new process would be expanded to cover the whole economy.
MOSCOW, April 20 (RIA Novosti)
