Budget Support for Investment Activity

Practical Significance and Limitations of Budget Support Analysis

The study of budget support instruments for investment activity holds not only theoretical but also practical value. Research findings can be used by government authorities to shape regional strategies, by the business community to assess risks and opportunities, and by the academic community for further development of investment incentive models in a changing economic paradigm.

To assess the impact of budget support on investment activity in Russian practice, data on the size of this support across various funding areas was examined. It should be noted immediately that identifying budget allocations directly for investment support is somewhat conditional. Investment support is provided not only through direct mechanisms—there is also a wide range of indirect mechanisms, particularly subsidies for product discounts, which allow invested capital to be recouped. This too constitutes investment support, as it increases profitability and guarantees demand. Therefore, we should clarify that what was analyzed was not the entire contribution of the federal budget to development, but only direct mechanisms for subsidizing investment expenditures.

Assessment of Budget Support for Investment Activity in the Business Sector Using System-Wide Instruments

At the first stage, data on budget support for investment activity in the business sector using system-wide instruments was examined. By system-wide instruments, we mean those not tied to a specific industry. These include:

• recapitalization of the "Russian Foundation for Technological Development" (FRP)—for subsequent issuance of loans at preferential rates for implementing investment projects;
• subsidies to Russian organizations to reimburse part of the costs of coupon payments on bonds issued as part of investment projects for implementing best available technologies;
• subsidies to Russian credit institutions and the state development corporation "VEB.RF" to compensate for lost income on loans provided to Russian industrial organizations for implementing investment projects;
• subsidies to Russian credit institutions to compensate for lost income on loans issued to Russian organizations and/or individual entrepreneurs for the acquisition, construction, modernization, or reconstruction of real estate properties for conducting activities in the industrial sector;
• subsidies to Russian organizations for financial support of costs for conducting research and development work on modern technologies as part of implementing innovation projects by such organizations;
• subsidies to Russian organizations to reimburse part of the costs of interest payments on loans and/or coupon payments on bonds raised as part of implementing comprehensive investment projects in priority areas of civilian industry;
• subsidies to Russian organizations to reimburse part of the costs of interest payments on loans and/or coupon payments on bonds raised as part of implementing comprehensive investment projects in priority areas of civilian industry.

Over the past five years (2021-2025), the total amount allocated for these purposes from the federal budget reached over 211 billion rubles, according to federal laws on federal budget execution. The year-on-year trend was mixed: the minimum allocation of 9.4 billion rubles came in 2021, while the maximum of 93.3 billion rubles was recorded in 2024.

The impact of budget support for investment activity using system-wide instruments was assessed by comparing the dynamics of budget allocations for these purposes against key macroeconomic indicators and general metrics characterizing propensity to invest (the ratio of gross savings to GDP, the ratio of gross fixed capital formation to gross savings, and the ratio of fixed capital investment to GDP)¹. Analysis of the data revealed a complete absence of direct correlation between budget support for investment activity in the business sector using system-wide instruments and either macroeconomic indicators or metrics characterizing propensity to invest. This can be explained by a certain time-lagged effect. That said, it's worth noting that the overall trend for key macroeconomic indicators remains positive.

Assessment of Budget Support for Investment Activity of Small and Medium-Sized Enterprises

The impact of budget support for investment activity on the development of small and medium-sized businesses in Russia was also examined for the period from 2021 to 2025. According to federal laws on federal budget execution, total federal budget allocations for these purposes over the period exceeded 175 billion rubles. The trend was positive from 2021 through 2024. The exception was 2025 (29,543,955 thousand rubles)—the volume of funds allocated to support investment activity of small and medium-sized enterprises fell back to 2021 levels (30,889,738.4 thousand rubles).

Based on data from the Unified Register of Small and Medium-Sized Businesses² , we concluded that the number of small, medium, and micro enterprises increased over the period under review (from 5,866,703 in 2021 to 6,835,555 in 2025). Moreover, the gross value added created by small and medium-sized business entities in the Russian Federation in current prices increased from 24,665.3 billion rubles in 2021 to 39,303 billion rubles in 2024.

Thus, budget support for investment activity in the small and medium-sized business sector demonstrates a positive effect—gross value added created by small and medium-sized business entities is increasing, as is the number of small and medium-sized enterprises. And while growth rates aren't the highest, the positive trend indicates that such support should continue.

Assessment of budget support for investment activity in the business sector showed that it is unstable and doesn't produce clear positive effects across all areas of business activity. Support for small and medium-sized businesses demonstrated positive impact, whereas support for investment activity using system-wide instruments showed no obvious positive effects. Furthermore, during the analysis the authors concluded that allocating budget funds directly and exclusively to support investment is fairly conditional. Therefore, the authors examined only direct mechanisms for subsidizing investment outlays.