In addition to science and education, the new draft budget calls for significant cuts in general education and health care, with spending for higher education some 20 percent less in 2016 than it was in 2012 and funds for pre-school and vocational training, for which the regions are responsible, cut even more with little hope Moscow will make up the difference.
At the same time, Kuzminov continues, spending on defense, state administration, and for secret accounts is growing, with defense up six percent in real terms and 72 percent in nominal terms, and spending for the rest of the government bureaucracy going up as well. Some of this money will boost industrial production, but far from all, he says.
Higher School of Economics experts said they were not able to analyze all of this sector because so many of the accounts have been classified. As a result, they implied, the situation may be even worse than the one they have painted.
But they were unanimous on one point: relying in the future on income from the sale of oil or taxes on oil extractors will not work for very long. They suggested that this was sustainable only for a year or two because expanded production will occur only in places where the cost of extraction is far higher than in current fields.
What the Russian government will have to do given this crisis, Kuzminov concluded, is not something it is prepared to do now. Consequently, all these issues have been kicked down the road for next year’s budgeteers when the situation may be far worse for them than the one they now face.