14 This decline in real spending should not be misinterpreted. It is estimated that Russian GDP dropped by 40% over 1991-1995. Thus, when measured as a percent of GDP, regional budget expenditures in 1995 were still above their 1991 level. And given the much higher rate of decline in federal budget expenditures, it is worth noting that in 1995 Russian regions controlled a higher share of the consolidated budget than in 1992, which reflects a dramatic fiscal decentralization in Russia that took place over 1991-1994 (World Bank, 1995a).'<sup>9</sup> The individual components of the national economy expenditures show widely varying trends over time. Food subsidies (never a large percentage of the total) were given by fewer and fewer regions from one year to the next, and for 1995 no food subsidy data were reported in the budget. The single largest category of expenditure, housing, dropped by 24%, that is, less than overall national economy expenditures in the period 1993-95 (thus, from 1993 to 1995 housing expenditures as a percentage of national economy expenditures increased from 56% to 62%.) The 34% decline in agricultural subsidies from 1993-95 matched the decline in overall national economy expenditures in that period, while transportation rose slightly from 1993 to 1995 (albeit with a dip in 1994), and the category 'bther' representing mainly subsidies to industry, energy and construction, declined by 59% from 1993 to 1995 (recall, however, the qualification to the comparability of 1993 and 1994 data with those of 1995.) Per capita investment in the Russian Federation dropped on average by 33% in real terms over the period 1992-1995, while loans to enterprises remained basically unchanged, while constituting a relatively small part of overall expenditures.

The relative declines in per capita total budget revenue were greater than for total budget expenditures. As a result, the regional budget surplus, which was quite large in 1992, almost disappeared. From 1992-95, pre-transfer revenue dropped by about 27% on average across the country, and average transfers declined by 28%. Transfers dropped by 2.3 times in 1995 after three years of growth.

The only non-budgetary category shown in Table 5, household income, is also the only category that has steadily grown in real terms from one year to the next, rising by 48% from 1992 to 199520, which reflects the gradual recovery of household incomes after their dramatic decline in 1992 following price liberalization.

> _19_ In fact that trend stopped in 1995, when the relative share of local budgets dropped compared to 1994 mainly due to a drastic decline in federal transfers to the regions. See also Table 2 in the previous section. 20 There are some inconsistencies between reported trends in household incomes in Table 1 and those in traditional statistical reports by Goskomstat. The difference is the largest for the change from 1992 to 1993. Table 5 suggests that real incomes increased by 22% while regular Goskomstat publications report a 10% increase. This difference should be attributed to some inconsistencies between Goskomstat's reports on regional CPI and regional nominal incomes and their aggregate national equivalents, which reflects general weaknesses of the existing Russia income statistics and underlying household surveys (World Bank, 1995b)