Yeltsin Vows to Take Offensive on Slumping Economy : Russia: President seeks support outside Parliament for his 1995 budget, which many lawmakers oppose.

Nearly three years after launching free-market reforms, President Boris N. Yeltsin admitted Saturday that Russia’s economy is still in decline, but he vowed a bolder attack on inflation with or without Parliament’s support.

“We are close to overcoming the crisis,” Yeltsin told more than 600 political and business leaders summoned to the Kremlin. “In 1995, we will take the offensive. We will achieve financial stabilization and move on to creating conditions for economic revival.”

Yeltsin’s address and the one-day assembly itself, which he orchestrated, meant more as a challenge to the conservative-led Parliament than as a clear blueprint of how to achieve his aims. He indicated that he would ignore lawmakers if they continued to oppose a tight 1995 budget like the one his government has submitted.

The event was one of the president’s increasingly rare initiatives in support of Western-style economic reform, and it came after his commitment to that ideal had been thrown into question by a messy, monthlong turnover of his entire economic team.

Since his historic decision in January, 1992, to free most prices, Yeltsin has had five finance ministers, three central bank presidents, six Cabinet shake-ups and ongoing internal struggles over the reform policies pursued in his name.

The latest personnel changes, which again left the Cabinet split between reformers and reform resisters, were prompted by a one-day drop of 25% in the ruble’s value Oct. 11 and the government’s narrow defeat of a parliamentary vote of no confidence two weeks later.

The current Parliament, elected last December after Yeltsin shut down the old one in a bloody showdown over reforms, went along passively with the government’s 1994 budget early this year.

But its lower house, the Duma, voted 227-57 on Friday to reject the proposed 1995 budget as unrealistic, challenging the government on its top economic priority.

Yeltsin said Saturday that he is ready for “reasonable compromise” with the Duma but warned against “irresponsible populist solutions” that would revive inflation.

Duma Chairman Ivan B. Rybkin, speaking at the Kremlin gathering, outlined the battle ahead. He said the government proposes too big a tax burden on individuals and not enough subsidies for Russian producers and exporters.

“We cannot backtrack on the road to reform,” he said. “But this does not mean there are no alternative ways to get there . . . or that the social costs of large-scale transformations should not be discussed.”

The government, which collected just half its expected tax revenue this year and had to slash spending, now proposes to cover a projected $22-billion gap between 1995 income and revenue by borrowing abroad and selling Russian bonds.

For the first time, the central bank would be barred from printing rubles to cover any shortfall. This, according to government calculations, would bring inflation down to 2% or less per month by mid-1995.

Prices in Russia are expected to triple this year, an improvement over last year’s ninefold increase, but production is shrinking with no forecast of growth before 1996. Short of credit and indebted to each other, thousands of enterprises are paralyzed.

And the government appears divided over how to shape the free market.

Anatoly B. Chubais, the former privatization chief now in charge of the overall economy, is the only surviving young radical from the reform team of 1992. Yevgeny Yasin, the new economy minister, is 60 years old and somewhat more moderate. Finance Minister Vladimir Panskov, who spent time in jail last year on unproven charges of bribe-taking, is a Soviet-era technocrat. All are personally loyal to Yeltsin.

The government is under criticism from conservative lawmakers for pushing a tight-money strategy and from liberal ones for failing to undertake planned reforms of the armed forces and the state collective farms--bureaucratic monsters that eat up much of the budget.

“We’ve been taking this medicine for three years. Now they are suggesting that we continue taking it for a fourth year and some deity will throw a switch that will suddenly boost our production,” Mikhail Zadornov, chairman of the Duma budget committee, said before Friday’s vote.

Seeking to sidestep Parliament, Yeltsin invited industrialists and bankers--”the people organizing our new economic life,” he called them--to join regional governors and moderate lawmakers at Saturday’s assembly. He also handpicked the 14 speakers, who generally endorsed his austerity message.

The four-hour session reminded some participants of the Communist Party Central Committee meetings held in the same Marbled Hall of the Kremlin before the Soviet Union collapsed. Sergei Y. Glazyev, a leading opposition economist with a comprehensive reform plan of his own, was denied permission to speak.

“It is clear that Parliament will never approve the 1995 budget, so the president is enlisting support in other circles,” said Nikolai I. Travkin, a member of the Cabinet and the Duma. “I am sure he will put this support to good use, to give legitimacy to some actions that the Duma won’t go along with.”