№15. Round table “From stagnation to development: how to achieve the realization of Russia’s potential and ensure real growth?”

Published: March 30th, 2017

Official forecasts of the development of the Russian economy are based on an extremely passive and pessimistic scenario. Experts of the Moscow Economic Forum discussed alternative strategies for Russia's development in the framework of the round table "From stagnation to development: how to achieve the realization of Russia's potential and ensure real growth?» Moderators of the discussion were the co-chairman of the MEF, the chairman of the council of the Chamber of Commerce and Industry on the development and competitiveness of the economy of Russia Konstantin Babkin and the authorized representative of the President of the Russian Federation for the protection of entrepreneurs' rights Boris Titov.

The strategy developed by the council of the Chamber of Commerce and Industry was voiced by Vladimir Samokhvalov, the head of SBS Consulting. He stressed that the program includes steps that allow reaching economic growth rates above the world average - more than 5% per year. The catalyst of growth, according to the author of the strategy, should be the manufacturing industry, since the manufacturing industry has the maximum potential for growth, has the maximum synergistic and multiplicative effect for the economy.

"We believe that the strategy should focus on eliminating those factors that impede the competitiveness of Russian products. And without eliminating these factors, it is not necessary to talk about rapid growth rates, "Samokhvalov stressed..

Now, Russia lags behind the developed and developing countries in terms of the growth rate of the manufacturing industry. Weak results of manufacturing sectors, according to the speaker of the MEF, are a consequence of weak economic policy.

"At the present time, unfortunately, the cost of furniture production in our country is higher than in Europe by 20%. The cost of production of fabrics is higher than in Southeast Asia, by 10-15%. The cost price of production of tractors is even higher than in Canada, I am not talking about China. And the key factors that affect the high cost price are interest rates, the tax system and the high cost of components," the expert said.

The strategy developed by the CCI proposes to focus on three areas: reforming the principles of foreign trade, creating an incentive fiscal policy and improving monetary policy.

The proposals include the following principles of state industrial policy: support measures should be systemic and should be directed to all sectors of the economy, all existing industrial enterprises should become a priority of state support. It is necessary to create tools that will not be available to individual enterprises, but to all players in this or that sector of the economy, entrepreneurs.

The strategy outlines the priorities of the foreign trade policy: the creation of conditions for the development of non-primary production, the active use of tariff and non-tariff methods acceptable to the WTO to increase the competitiveness of products, the intensification of the struggle for the interests of Russian producers in the international arena, subsidizing competitive producers.

The tax policy proposes to introduce an investment incentive of 50% for the profit tax, reduce excise taxes on diesel fuel and introduce a differentiated VAT refund, cancel the marking of taxes, introduce a single tax on the income of individuals with a progressive scale, increase the share of regional budgets in tax revenues.
In the field of monetary policy, the experts of the MEF recommended making the Bank of Russia's priority a development of production and economic growth, which will completely change the direction of policy. It is necessary to provide the real sector with affordable lending by gradually reducing the key rate, reducing the amount of gold and foreign exchange reserves and channeling the freed funds to develop export credit to domestic producers, ensuring access of small and medium-sized banks to the refinancing system.

"Realization of the directions mentioned above will allow us to reach the growth rates in the region of 5% per year. At the same time, the share of the manufacturing industry will increase significantly. The most active growth will be shown, according to our estimates, in mechanical engineering, since it is in this sector that the maximum potential lies. We believe that the enterprises of the machine-building complex are able to grow by 10-12% per year. And, in fact, they will be a catalyst for economic growth, "concluded Samokhvalov.

Boris Titov introduced the Stolypin Club strategy, which involves three stages: a new industrialization, sustainable growth and sustainable development. Since 1990, the Russian economy has grown by 13%, while the world economy - by 148%, said the expert. He stressed that the priority for Russia's development should not be combating inflation, but economic growth.

At the first stage domestic demand and current capacity can become a catalyst for growth. "Kudrin says that there are no free capacities. In fact, we conducted a special analysis - 25% of the capacity is not involved, "said the Commissioner for the Rights of Entrepreneurs.

The strategy proposed by Boris Titov also implies an economic growth of 5% per year and a doubling of GDP by 2035.

"We all have to work in one direction to achieve our main goal, not monetary tightening, not a tough financial policy, not a restriction, but a transition to quantitative easing. This path was chosen by the whole world, and our country should choose, "Titov concluded..

Deputy Chairman of the State Duma Committee for Economic Policy, Industry, Innovation Development and Entrepreneurship Valery Hartung noted that for economic growth the government should strengthen state support measures for entrepreneurs in industries that require investments, and introduce a differentiated VAT refund. The need to improve the investment climate was spoken by the chairman of the committee of the Chamber of Commerce and Industry for financial markets and credit organizations, Vladimir Gamza. According to him, another option to ensure economic growth, except for a high investment growth, simply does not exist.

Dmitry Kurochkin, vice president of the Chamber of Commerce and Industry, described the main practical steps for the implementation of Russia's development strategy: the adoption of a federal law that establishes general rules for the establishment, collection and regulation of non-tax payments, the adoption of a federal law on the fundamentals of state regulation of prices and tariffs, сarrying out of audit of measures of support of subjects of Entrepreneurship.

Support for entrepreneurs should be expressed in access to cheap loans and government subsidies for exports, says Mikhail Maltsev, director of the "Fat-and-Oil Union of Russia".

"Let's stimulate exports and dumping, because we want to occupy new markets. Without dumping in the new markets, no one waits for us. To dump, we must work at a loss. To do this, we need the state to conduct an export policy to compensate for these losses. Then we will also grow," Maltsev said..

Participants in the discussion agreed that Russia has the potential and unused capacity for economic growth, but large-scale changes in economic policy are needed.