Importance The problem of the efficient use of budgetary resources and the search for new financing instruments for the rural development programs of the Russian Federation at the regional level in the context of limited budgetary resources increasingly gains popularity. Objectives The paper's objective is to substantiate the need to use block grants as an instrument for rural development financing at the regional level based on the Federal budgeting equalization transfer practice in the Russian Federation and on using the developed countries' best practices. Methods Using general scientific methods, we have analyzed the existing mechanisms for funding of the rural development programs at the Federal and regional levels. The paper uses economic and mathematical model in order to suggest allocation of the Federal budgetary funds between the Russian Federation regions. Reduction of the budgetary amount and the need for co-financing of expenditure obligations from the consolidated budgetary and extra-budgetary sources is one of the significant weaknesses of the rural development policy implementation. Power decentralization has not led to reinforcement of the financial resources delegated to regional authorities of the executive power and to municipal self-government. In many developed countries, the support for such changes of conceptual foundations is attached with block grants, which are not used for financing of the rural development programs in the Russian Federation. Results The developed economic and mathematical model of the Federal budget funds distribution with the use of block grants would eliminate a significant drawback in allocating subsidies from the Federal budget: all the constitutional entities of the Russian Federation will receive Federal funds to implement their rural development programs. Conclusions and Relevance We conclude that the portion of subsidies replacement from the Federal budget for co-financing of expenditure commitments by block grants will enable to improve not only the efficiency to implement the rural development programs at the regional and local levels, but also will enhance the budgetary funds efficiency.
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