Institution of Subsidies in Russia

The institution of subsidies in the theory of public choice is presented as a mechanism of consensual decisions by state and municipal authorities, depending on legislative and local initiatives. The subsidy process is characterised by the concepts introduced in the works of D. North, O. Williamson, D. Commons. The indicators for assessing the quality of the Russian institute of subsidies to local governments are identified. On the basis of sample data on fifty regions of Russia in 2019 - 2024, the quality of this institution is assessed. The signs of adaptation in the subsidy institute to external factors from the early 2000s to the present are highlighted. Although strict budget constraints are observed, there is a decrease in transparency, growing uncertainty and transaction costs. As a result, public capital is being eroded, which weakens incentives for local authorities to develop their own sources of revenues, creates opportunities for corruption and voluntarism, and forms a negative public opinion about the process of transfer distribution. It is necessary to change the existing procedures of subsidising by federal and regional authorities and transition to a more effective institutional design in the process of granting subsidies to municipalities.