"The trends that we point out may lead to economic upheavals similar to the 1998 [financial crisis] detrimental to government and business altogether," Vedomosti quoted senior economist with the Troika Dialog brokerage Yevgeny Gavrilenkov as saying.
Gavrilenkov is one of the authors of a letter to Prime Minister Mikhail Fradkov, also signed by 10 other analysts from leading investment companies operating in Russia, including the Renaissance Capital Group, the Bank of Moscow, the United Financial Group, and others.
The experts said the road to welfare lay through a higher number of jobs in the private sector, rather than through increased budget spending that can only drive inflation further up, the paper wrote.
On Thursday, Fradkov told ministers their task was to keep inflation in check after the cabinet decided to increase budget spending by 124.7 billion rubles ($4.3 billion). Officials repeatedly said inflation would not exceed the target of 10% this year.
In 1998, the Russian economy went into meltdown after the government overstretched itself issuing short-term bonds and inflating its debt to exorbitant levels. It defaulted after world oil, gas and metals prices collapsed, which led to a crisis in the country as the ruble nose-dived.
"We are concerned about the populist budget policy at a time when the quality of spending is more crucial," said Yaroslav Lissovolik, senior economist with the United Financial Group.
The authors of the letter also offered the cabinet "intellectual" help but the government has not responded yet, Vedomosti said.
The paper said there was no official answer to the letter yet but some officials have already disagreed with it. An official in the Finance Ministry told Vedomosti budget spending did not directly affect inflation. Andrei Klepach of the Ministry of Economic Development and Trade said cuts in state investment would aggravate business environment and slow economic growth.
Daphne Ter-Sakarian of the Economist Intelligence Unit said it was politically difficult to refrain from higher social spending in an economy swelling on oil prices.
