The way to reduce poverty is to go for growth while cutting state expenditure relative to the national product, Andrey Illarionov, economics adviser to President Putin, has said in a televised interview. To back up his point, he cited poverty-reduction successes in China in particular and failures elsewhere, and the policies underlying them. Putin is on record as wanting to achieve a free country of free people. The economic component of that is his stated aim of doubling GDP and putting cash into citizens' pockets. Money means freedom, Illarionov said, and a part of that policy is the controversial move to convert some state benefits from in-kind to cash.

[Presenter Vladimir Pozner] - Channel One TV
Money means freedom
- So, money means freedom. You coined that phrase as one of the goals of the economic reforms. The president's primary goal, as he put it recently, is to create a free society of free people. Is this really an economic goal?
- First of all, that money means freedom is not the stated aim, it is merely a fact of life. It is a principle of life. Money gives each individual, family, company, region, the country freedom. Freedom to take decisions, to allocate resources and to do what that individual, region or country thinks is right. Secondly, is the aim of a free society of free people a purely economic aim? Of course not. But it is in part an economic aim. Poor nations are not free. And poor people are not free, because if you do not have the means to buy a loaf of bread and a bottle of milk, then it is hard to describe yourself as free. Link between poverty and state expenditure 
- At a news conference you said that a doubling of GDP per head of population represents the solution to another stated aim, the fight against poverty. Is that the case? 
- It is one of the methods, one of the best and most effective methods, of tackling this issue.
- Okay. But how to achieve this? You have also said that social expenditure should be reduced.
- I did not say that. I said something different. I said that when we set ourselves the goal of reducing poverty it would be good to see how other countries have tackled this issue. And it turned out that the problem had been best solved by countries such as China. In the past 20 years, China has cut its number of poor by 420m people. There has never been such a fall in the numbers of poor people in the history of the world. Never. This is a phenomenal success. In the same time, some other countries and regions have not only failed to reduce their numbers of poor but have actually increased them. The obvious question is how have the Chinese managed to do it while others, for example in Latin America and Africa and the sub-Sahara, have not? So then the economic analysis begins, and it turns out that, for example, in China and India state expenditure has been cut as a proportion of GDP. And in African and Latin American countries it has risen. So one makes certain observations. Those countries that have cut their state expenditure as a proportion of the national product also have the highest rates of economic growth and the fastest rates of poverty reduction. Where there is no economic growth, there is growth in poverty. 
-  You say that China has managed a serious reduction in the numbers of poor people. But is there not a trick here? In China the poverty threshold is so low that it is fairly easy to rise above it. Could this be a trick of statistics?
- You know, there is much more poverty in Africa than in China. Historically, and all the more so at present. Nonetheless, the result of economic growth in African and Latin American countries is that poverty is rising. It is not a matter of the starting point, but of what kind of policy is pursued. 
- So one way of tackling the issue is to cut state spending? 
- I would put it this way. It is an issue on which society should decide. It is an issue of national consensus. What do we want? A fight with poverty, or reduction of poverty? If want the fight, then over 70 years and the subsequent 10 years we have learnt what we need to do. We did it for 70 years in the Soviet Union and for 10 years in the 1990s. We can continue with the existing policy and the number of poor will not fall. Or we can set about reducing poverty. Here, world experience shows absolutely clearly which approach we need. 
- Could reducing poverty mean additional difficulties or ordeals for the ordinary people, including the poor? 
- Well, what does poverty reduction mean? It means that every person who was poor yesterday receives a chance to work and earn. And earn decent money, which can be spent on whatever he and his family believe is essential. Education, healthcare, food, travel, on anything at all, on buying a car, on buying a flat and so on. That is the meaning of the phrase money is freedom. You spent the first part of this programme today discussing referenda. That is, expression of popular will. The most often-held referendum, the most-often held vote is the vote with the rouble - when you go into a shop and spend it on what you think you need to buy.  So money is the most democratic of instruments.

Benefits into cash

- The replacement of benefits with money. It is said to be a good thing, and out of 32m recipients of these benefits the state will taken on 13m and the regions and governors will take on 19m, and themselves decide what they can and cannot do. Some see this as a move to ease pressure on the budget and nothing more. Is this about reducing poverty or about fighting poverty?
-  You are right to point this out. The thing is that very often two different meanings are confused - benefit recipients and the poor. By no means all poor people enjoy benefits. And by no means everyone on benefits is poor.

Credit to business for stimulating growth

- You once said in an interview, and I quote, that not only the state but society should recognise the contribution made by business towards extricating the country from crisis. How do you view this trend of calling on businessmen to repent and forcing them to, so to speak, share with the rest of us? 
- From my viewpoint, repentance is a highly individual thing. It applies if you think you have committed a crime or mistake or done something bad. It cannot thus be applied to a group or class of people. Secondly, by definition in its religious sense, repentance is a fairly intimate thing. But most Russian businesses have been doing something very important, very necessary and essential for the country over the past 12 to 15 years. Amongst other things, they have provided the economic growth and reduced the poverty that we are discussing now. At present the number of poor people is down to 29m. But 25 years ago they numbered 50m. We could say that this represents modest progress. But the number of poor people in Russia has been cut by 21m, and much of the credit for that goes to our business sector. It created production, created jobs, provided economic growth, enabled people to earn. These are our people who are engaged in business. And in not particularly easy conditions. So if you have any doubts - 
- So who are the poor? 
- Our citizens, a third of the population. In 1992 a third of our people were on incomes lower than the subsistence minimum.

Convertible rouble 

- I hear you are against a stronger rouble when it comes to doubling GDP. But the president says that the rouble should be convertible within three or four years, to the surprise of [former central banker Viktor] Gerashchenko. Do you have differences with Mr Putin on this? 
- I have no differences with him. Remember, he said that convertibility could happen earlier, within two years. 
- But does that not mean a stronger rouble? 
- No. Convertibility means additional freedom for all Russians who have the Russian rouble in their pocket or in the bank. Because convertibility means freedom to use money. You earn your pay in roubles, and you want to spend that money in such a way that you regard best and necessary. Convertibility gives you that opportunity in Russia and beyond. It means freedom of choice for Russian citizens, Russian companies, so that they can spend what they have earned. Any restrictions on convertibility represent restrictions applied by the state, that is by some people in relation to other people, so that they cannot freely dispose of what they themselves have earned.