Despite the rejection of a planned economy in the nineties of the last century, long-term plans and strategies still lie at the heart of the activities of most large enterprises and the state itself. Since everything in the modern world is interdependent, and almost no one lives on subsistence farming, special deflators are used for more or less reliable forecasts - these are price indices for basic goods and services. These tools are managed by the Ministry of Economic Development.
The concept of deflator indices of the Ministry of Economic Development
The Ministry of Economic Development is developing its indicators, primarily for the state. Based on them, strategic planning for the long term is carried out, medium-term plans, programs and forecasts for the development of both the Russian economy as a whole and its individual branches are developed.
In its content, a deflator is a coefficient that provides a measurement of the valuation of goods and services in comparable terms.
Speaking in a more understandable language, when using the deflator in the calculations, prices are “cleared” of the inflation component and begin to more or less objectively reflect the real value of the conditional product, regardless of the year in which it was produced and how much the main cost of its production cost then.
Data Sources for Deflator Calculation
The main data sources for calculating deflators are, of course, various summary statistical reports. Organizations of all forms of ownership and individual entrepreneurs annually report in the reporting forms to the statutory bodies the main indicators relating to their activities. Statistics processes these reports, compiles and submits to the Ministry of Economic Development. For reliable calculations and the identification of dynamic trends, summary data for a number of years are used.
The main deflators used in planning
The main deflators of the Ministry of Economic Development, which are used in the construction of plans, are usually considered:
- Consumer price index, which takes into account price changes due to inflation for food and non-food products and fuel and lubricants for paid services of housing and communal services and other enterprises.
- The producer price index, taking into account the dynamics of producer prices by various sectors of the economy. Details are given to industries related to energy, mining, processing, retail, construction and agriculture. Typically, the assessment is done in two ways: with and without the export component.
- Indices of changes in real wages and real incomes of the population, on the basis of which forecast calculations for the wage fund will then be built.
- The index of change of the ruble against the dollar.
Deflator Indices in Budget Planning
When drafting budgets and medium-term financial plans at all levels, the forecast of socio-economic development of the territory is taken as the basis. The calculation of expected budget revenues is based on the forecast data in accordance with the norms of the Tax Code and other regulatory legal acts (decisions on setting rental rates, etc.).
The expenditure side of the budget is determined from the volume of adopted programs in accordance with the goals and objectives defined by the budget and tax policies for a certain period.
But when determining the amount of budgetary funds needed to implement a particular program over the course of a number of years, line ministries and departments are guided by official indices - deflators of the Ministry of Economic Development for years. With their application, the costs of maintaining state-owned property, utility bills, and necessary public procurement are estimated.
Deflator Indices in the Real Sector
The main scope of deflators is the public sector. Large enterprises use them selectively.
Schematically, it will look like this: economists-planners always take into account that the price of steel will depend on the forecasted dollar exchange rate, they also determine the possible demand and volumes of export and domestic revenue. After deduction of obligatory payments, it becomes clear what real amount the enterprise will have for carrying out its production activities. Comparison with the costs of the production process itself will allow us to assess the possible volume of investment in development and the need to attract borrowed funds.