What is a subsidy? Who gets the subsidies?

When drawing up a draft budget, both state and local, regulation is applied to the equal distribution of finance among federal subjects, as well as between certain branches of production and the national economy. Its essence lies in aligning the systems of securing territorial or sectoral entities through the use of such forms as subsidies, subsidies, subventions, and others. At the same time, the government or local administrations must comply with minimum state standards.

The practice of distributing funds between budget funds of different levels or industries is widely used in the world. In the Russian Federation, more than 70% of financial regulation is allocated from regulatory revenues. What is the subsidy and what role it fulfills in Russia's domestic economic policy will exhaustively explain the Budget Code of the Russian Federation.

Forms of regulation

Among the budgets of different levels, the funds are redistributed through irrevocable provision of financial support in the form of the following basic forms of regulation:

• Subsidies;
• Normative grants (transfers);
• Subventions;
• Subsidies;
• Compensations.

The concept of subsidies

What is a subsidy? This is the money that allocates the state or local budget to support unprofitable organizations and enterprises. Those whose sales revenue is less than the costs of producing and selling their products. As well as subordinate budgets to cover the gap between their spending and income. Thus, they compensate for costs, cover losses. Granting subsidies helps to prevent bankruptcy and prevent the excess of prices for certain consumer services and goods. Part of the cost of these goods is paid from the budget. This is due to subsidies. Such a tool in financial policy is widely used in states where administrative regulation of the economy is widespread.

What is an equalization grant?

A leveling grant is an intergovernmental transfer. It is aimed at smoothing the object's profitable ability. Subsidies aimed at balancing the consistency of the constituent entities of the Russian Federation are included in the overall state budget. They are distributed evenly or in different ways in accordance with the government's methodology. Funds allocated for the federal subsidies are the Foundation for Support of the Subjects of the Russian Federation. The following federal subjects (regions) receive the greatest amount of finance from this fund:

• The Arkhangelsk.
• Altai region.
• Amurskaya.
• Astrakhan.
• Bryansk.
• Vladimirskaya.
• The Volgograd.

Subsidies for citizens

What is a subsidy for the population will help to understand an uncomplicated example. It is known that some of the citizens in terms of their incomes are below the level of accepted public standards. In order to maintain financial support for this category of the population, the state can use subsidized mechanisms aimed at partially covering payment for utilities, the cost of purchasing social goods and medicines, as well as benefits. Providing funds to citizens gives the state the opportunity to spend less money than when subsidizing production and services.

The main directions of using subsidies for the population

The most common types of subsidies for the population of the Russian Federation are:

• Regulation of tariffs for utilities;
• Compensation for travel to certain categories of citizens;
• Financing of veteran organizations and various societies of people with disabilities;
• Housing subsidies.