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In conducting territorial price comparisonsan approach based on the use of regional consumer baskets without making themcomparable does not permit to take into account peculiarity of each territoryand a corresponding regional structure of people’s needs. In view of this, it mustbe supplemented with the assessment of the territorial consumer norms.Inter-regional consumer indices can become quantitative expression of such sortof comparison. Such inter-regional consumer indices represent a ratio betweenthe size of a consumer basket of a pilot region and model-region in uniformprices.

Subsistence minimum (as the cost of a setof goods and services) discriminated across regions can serve as an example ofa consumer basket differentiated across regions. Due to variation in structureand price level the size of a subsistence minimum allows to assess the level ofdifferences in purchasing power of the population expressed in a number ofminimum sets of goods and services corresponding to the amount of per capitaincome.

Cost of life of the population of differentterritories can be evaluated through fixed sets of goods and services andthrough their comparison with household earnings and expenditure. A fixed(unified for all territories) set of goods and services was used as a basketfor comparison. It is due to the fact that at present in Russia there are noreliable regional estimates of real final household consumption. Data onconsumer expenditure was obtained from surveys of unrepresentative sampling ofhouseholds and insufficient number of examples of expenditure on goods andservices in a separate region.

Obtained results of the assessment of theruble purchasing power across regions have allowed evaluating the nationalprice level in model-region’s prices. Average all-Russia prices have turned out to be belowthe model-region prices (Moscow by 10 percent). If we use subsistence level asa consumer basket then the difference amounts to 25 percent.

Along with nominal incomes the differencein the level of purchasing power is also high in the regions. If in the wholeof the Russian Federation in 1998 the ratio between the average per capitaincome and the size of the subsistence level amounted to 197 per cent, then thehighest purchasing power of the average per capita income was characteristicfor Moscow - it amounted to 592 per cent, and the lowest level was registeredin the Republic of Ingushetiya—78 per cent. The gap between average level of incomes in these tworegions has reached 7.6. In 1997 the gap between the purchasing power of themoney incomes between regions amounted correspondingly to more than8.5.

Interregional differences remain considerablein the sizes of the subsistence level and in poverty incidence. In 1998 inRussia as a whole the number of people with money income below the subsistencelevel amounted to 24 per cent. At the same time, it differs considerably acrossregions. The lowest shareof poor people in 1998 lived in Tyumen Oblast (15 percent), Moscow (18 per cent) and Samara Oblast (18 per cent). The highestincidence of poverty was recorded in the Republics of Tuva, Mariy-El,Daghestan, Kalmykia and Chitinskaya Oblast. Poverty incidence in those regionsamounted to 58-75 per cent. As can be seen from that data the interregionaldifference in poverty incidence reaches a factor of five.

There are more considerable and dramaticgaps that exist in assistance to the most vulnerable groups of population indifferent regions. According to existing practice, households receiveassistance from the local governments, enterprises and organizations in theform of various benefits and privileges enacted by law or rendered byenterprises and organizations in money or in-kind.

In 1998 34 per cent of households receivedvarious benefits and privileges nationally. At the same time, in some regionsthe respective share has reached 60 per cent and went even higher than that(Murmansk Oblast, Republic of Udmurtiya, Kirov Oblast, etc.) and in 5 Russianregions that share does not exceed 10 per cent. The largest number ofhouseholds receiving benefits and privileges are in Murmansk Oblast (65 percent) and the smallest number is in the Republics of Daghestan and Tuva (1-4per cent). At the same time, these republics are characterized by the lowestpoverty incidence.

In 1998 the correlation ratio between thepoverty incidence and the share of households receiving benefits amounted to0.35. In 1997 it reached 0.38. In other words, these two indices demonstrateobvious inverse correlation, i.e. the higher the poverty level in the regionthe lower the number of households receiving benefits and privileges and viceversa. Because the vast number of those types of assistance is rendered byenterprises and organizations, they are widespread in the regions with thehighest financial potential. That is why the existing practice of renderingassistance does not lead to cutting the existing social and economicdifferentiation. On the contrary, it leads to a growth in differentiation inthe standard of living and increases the gap between the inhabitants ofdifferent regions. That is why, it is difficult to accept the existing practiceof distribution of different benefits and privileges across regions asjustified and fair.

Together with interregional differentiationin distribution of income and social types of assistance their inner-regionaldifferentiation is highly pronounced. We will analyze this problem in moredetails based on the data for the regions where the pilot projects wereimplemented. At the same time the problem of fairness of various types ofassistance and privileges received by households with different materialincomes will be also tackled.

The principal indicators of incomedifferentiation for the regions where the pilot projects were implemented areprovided in the following table.

Table3.5

Income differentiationof the population in the pilot regions

FundsIndex

GiniIndex

1997

1998

1999

1997

1998

1999

KomiRepublic

12.2

13.6

13.1

0.379

0.394

0.388

VoronezhOblast

8.4

10.1

6.7

0.325

0.351

0.292

VolgogradOblast

9.6

7.2

5.1

0.344

0.303

0.251

As can be seen from the data,intra-regional income inequality of the population is being characterized byhigh dynamics and differences in the value of indices across regions. Thehighest differentiation is characteristic of Komi Republic. In Voronezhand Volgograd Oblasts the level of differentiation is considerably lower. Atthe same time, in Komi Republic the differentiation indices remain ratherstable and in Voronezh and Volgograd Oblasts they dropped sharply following the1998 financial crisis.

The following table comprises informationon disposable income, money income and the value of benefits and privilegesrendered in-kind to the population with different materialwell-being.

Table3.6

Data on the aggregateamount of privileges in different regions (RUR)

KomiRepublic

VoronezhOblast

VolgogradOblast

Disposableincome

Monetary income

Value of benefitsand privileges*

Disposableincome

Monetary income

Value of benefitsand privileges*

Disposableincome

Monetary income

Value of benefitsand privileges*

1997

Allhouseholds

897

779

18

592

446

5

542

453

5

Of which

For decile groups

First

211

177

4

150

101

1

135

106

2

Second

302

259

6

225

154

1

211

171

2

Ninth

1478

1333

29

909

750

5

870

752

7

Tenth

2635

2251

60

1860

1377

23

1407

1145

6

With disposableincome below the subsistence level

245

200

5

175

110

1

175

133

2

1998

Allhouseholds

985

858

29

595

445

4

571

453

5

Of which

For decile groups

First

219

166

8

152

103

1

135

106

2

Second

318

259

10

232

160

2

211

171

2

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