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The meeting took place after the President’s meeting with members of the public of Daghestan.

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President of Russia Vladimir Putin: Good afternoon, colleagues,

You know already that we have just met with the leaders and residents of two districts – the Tsumadin and Botlikh districts.

I must say that it was interesting for me to speak with the people, including militia members who took part in the events of 1999, to listen to their opinion on what is happening in their small homeland, in their districts, and the republic as a whole.

Today I suggest discussing key issues related to Daghestan’s socioeconomic development, and what should be done to make better use of the region’s potential and create additional opportunities for improving living standards.

I must say there were positive dynamics in several areas last year. Industrial production in 2017 increased by 15.7 percent over 2016. The processing sector grew even more – by 19.5 percent. This trend has continued into this year as well.

I will not quote the average figures for the country – as you know they are much more modest. But the question is how Daghestan managed to achieve this. It is important to be objective in this respect. First of all, this was achieved owing to defence industry contracts. We must together – I have just spoken to Vladimir Vasilyev about this – think of how to diversify production so that the equipment at these enterprises is used productively and to discuss all other areas.

Daghestan farm workers achieved good results as well. Last year, agricultural output grew by 5.1 percent. If the national average is good at 2.4 percent (in previous years, on average, we had 3.4 percent nationwide), Daghestan had 5.1 percent last year, which is a good number.

Importantly, such results have impacted the growth of our citizens’ real incomes. At the same time, I want to point out right from the outset – and you know it as well as I do – the real income in Daghestan is lower than the average income in Russia. Of course, we need to work to increase the income of the people in Daghestan.

I would like to make special note of the demographic dynamics. Over the past few years, Daghestan has had one of Russia’s highest birth rates, which I was pleased to mention today when I talked with the residents of Botlikh and the Tsumadin districts. The chief physician of the district hospital noted a decrease – in fact, this is a positive development in the country as a whole – in child and maternal mortality. The fact that Daghestan is part of a nationwide trend is a good thing. It shows that much is being done in this important area.

At the same time, there are many issues in the region, and you yourself are only too well aware. The republic’s budget remains heavily subsidised. Once – and this was also mentioned at the meeting today – Daghestan was not a subsidised republic, but, on the contrary, it used to be a donor.

We must think together – this is primarily your task – but with the support of the federal centre, we must make sure Daghestan regains this status so that it is not 70 percent dependent on subsidies from the federal budget.

It is not that we do not want to pay this money from the federal budget. No. The point is to put in place its own production facilities, create well-paid, interesting, high-tech new jobs here and raise Daghestan and its residents up to a new level.

As you are aware, there are also debts, which are mounting. The employment situation remains extremely difficult. The unemployment rate here is much higher than the Russian average, and the level of wages, as I mentioned, is below the Russian average.

People of pre-retirement age and young people find it particularly difficult to find work. Young Daghestan residents have to leave the republic for other regions in order to find a job in which they have formal training and which will allow them to adequately provide for their families.

And, of course, one of the factors that seriously weighs on our country's development is corruption. We know that. This is a problem not just in Daghestan. We talked about this today too. Actually, the whole country knows it. Regions in both eastern and western Russia are affected by it. The country has this problem, and it did not skip Daghestan.

Yet, I am convinced that the republic has everything it takes to move to a new level of development. The key goals are increasing the real incomes and salaries of the people, creating new jobs, modernising infrastructure and social services. We need to make the most of the region’s competitive advantages. These include a convenient geographical location at the intersection of international transport corridors, good climate and a high sufficiency of energy resources, including hydroelectric power.

I would like to say that we need to use the republic's investment potential more effectively and attract both domestic and foreign investors here. All the more so since the republic has many areas for long-term investment.

These include agriculture, food industry, processing and, of course, tourism. Here, it is very important to consistently improve the investment climate. Let me note that, so far, the republic's position in national investment rankings is fairly modest: it ranked 69^th in 2016.

It is necessary to support entrepreneurial activity. The people of Daghestan are certainly good at it; you know this better than I. Today, thousands of Daghestanis are employed in small and medium-sized businesses, therefore it is important to ensure the most favourable conditions for the creation of small companies – farms, family businesses and enterprises.

And, of course, special focus must be placed on addressing current social challenges: improving the quality of healthcare services and education and reducing unemployment and poverty. I know that Mr Vasilyev and other leaders in Daghestan are determined to keep these matters under constant control. Let me assure you, colleagues, that you will receive the necessary assistance in addressing these development tasks, both through the ministries and departments and through state programmes.

Let us begin discussing these matters.

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