, , UPSC STUDY MATERIAL, 0
  • Although Russia had rich deposits of iron and coal but Industrial Revolution reached Russia very late because it did not have a good currency system, lacked adequate capital and serfdom still continued there.
  • The industrial output of Russia rapidly increased between 1860 and 1910.
  • After the abolition of Serfdom 1861, Government budget procedures were regularized and the State Bank was created in 1866 to centralize credit and finance.
  • In 1861, emancipation did release millions of peasants from their land, the strength of peasant communes prevented the widespread development of a kulak class.
  • The emancipation had significant social outcomes but it failed to contribute much to Russia’s economic development.
  • In the 1870s the government initiated several large infrastructure programs, particularly the construction of railways.
  • Liberal Government policies also encouraged more foreign investment. The main instigator of economic reform was Sergei Witte, who attracted foreign investment in Russian industries.
  • By 1880, Russia’s Railroad network had almost quintupled compared to 1860.
  • Progress led to the setting up of modern factories in Moscow, St. Petersburg and several urban working classes were growing space.
  • He also borrowed to fund public works and infrastructure programs including new railways, telegraph lines and electrical plants.
  • By the late 1890s, Witte’s reforms had had a visible impact on the Russian economy. Large amounts of foreign capital, mostly from France and Britain, had funded new plants and factories in St Petersburg, Moscow, Kiev and other cities.
  • Witte also undertook currency reform: in 1897, he moved the Russian economy to the gold standard, strengthening and stabilizing it and improving foreign exchange.
  • By 1917, Railways was given more importance and the rail network increased to 81,000 KM.
  • But all these reforms benefited only a small segment of population. Russia had all capabilities to become an economy but this was checked by clash of class interests and discontent among the people.
  • New Economic Policy of Lenin’s prepared the ground for future development. This policy was continued for 1928 and with the help of five-year plan efforts were made to accelerate economic development.
  • The first five year plan of 1928-1932 provided advanced loans to farmers, supplied them machines and chemical fertilizers on favorable terms and allowed them to rebate in taxes which  mainly emphasized collective farming.
  • The Soviet State bought food grains from collective farms at cheaper rates and sold them at higher prices, the differences were utilized for expanding industrialization.
  • Drawbacks of Economic Development of this period was the quality of product was compromised in order to achieve the production target.
  • Emphasis on heavy industries created shortage of consumer goods and people had to face rationing and other problems. 
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