The government of any state often uses such an instrument as inter-budget transfers. They represent the amount of money that goes from one budget to another and, as a rule, is designed to achieve certain goals.
The following forms of intergovernmental transfers are distinguished:
- subsidies;
- subventions;
- subsidies.
Subsidies are understood as equity participation in financial support of a specific project. Their amount and direction of spending are strictly determined by the estimate, can be provided not only to budgets of other levels, but also to business entities and even individuals.
Subventions are inter-budget transfers that transfer from one budget to another or to the needs of a legal entity. A characteristic feature of this form is an irrevocable and gratuitous basis, as well as strictly targeted spending of funds.
Grants are funds that are provided to budgets of other levels on a gratuitous basis that does not require a return in the future, in addition, there is no need for targeted use.
The main difference between subventions and subsidies is the fact that in the first case, funds from the budget system are intended for specific purposes. In case of non-compliance with a certain direction, the recipient of the money is obliged to return them to the state budget in full. And subsidies and subventions differ from each other in the scale of investment, because the first concept involves only equity participation, and not full financing. What unites all of the above forms is the fact that all inter-budget transfers are transferred free of charge.
If we talk about legislation, then we can highlight the main trend, which reveals the direction of budget financing. For example, amounts are allocated from the federal budget for state support of the stability of individual subjects of the budgeting system in the form of subsidies, as well as funds are transferred to budgets of other levels and extra-budgetary funds in the form of subventions and subsidies.
Often the government forms the Federal Fund, providing co-financing of local expenditures in the form of subsidies in the case when budgets of other levels can not cope on their own. A set of subventions of the federal budget refers to the Federal Compensation Fund.
Each subject of the Russian Federation organizes its own fund, which can also provide inter-budget transfers. As a rule, they are intended to finance the stable operation of municipal units in the form of subsidies, and the subventions and subsidies provided to local budgets and autonomous okrugs are based on specific agreements and agreements with higher budgets. The amount of funds in the form of subsidies is calculated based on indicators of the population of a particular subject. To transfer them, a special fund for financing settlements or municipal areas of a regional level was created.
Local budgets are also involved in the provision of inter-budget transfers in the form of subsidies to ensure the financial stability of needy settlements, subsidies in order to solve important municipal problems. In addition, deductions are made to the budgets of individual constituent entities of the Russian Federation for the organization of a regional fund. To provide subsidies at the local level, funds have been created to support settlements in specific areas. And funds from local budgets to higher authorities (the budget of the constituent entities of the Russian Federation) are transferred only if the revenue from tax fees has exceeded the target.
Thus, it can be argued that inter-budget transfers are an effective tool in the hands of government bodies that helps regulate the financial situation of individual constituent entities of the Russian Federation.