Doing Business in Russia. Котова К.П - 21 стр.

                                        21

cial consumption funds. Could all these peculiarities be disregarded when
launching the economic reform?
      Precisely for that reason the 500-Days Programme renounced the admin-
istrative price rise. In keeping with this programme, the liberalization of prices
had to be effected only AFTER the normalization of the financial situation with
a wide range of measures aimed at the nationalization, privatization and de-
monopolization of our economy.
      But Pavlov’s Cabinet took another road: it introduced a sharp, administra-
tively-controlled rise in prices and compensations, which should have shown the
state’s concern for its citizens. Although everybody can see clearly today what is
behind this state charity, it is important to assess the suggested system of com-
pensations from a professional standpoint, freeing it from all ideological gloss.
      From these standpoints the main thing needed for the success of the re-
form is minimum compensation. Experts believe that if it is more than two-
thirds of the total sum of the price rise the whole operation will be meaningless.
True, Pavlov pledged to compensate people for about 85 per cent of the retail
price rise. But it won’t be possible to approve or disprove this figure, because –
unlike the subsidized prices of specific goods – compensations do not concern
particular products. Our losses will depend on the consumption patterns in each
family, on the sources of food and other goods supplies, territorial, ethnic and
other factors.
      In fact, nobody was going to consider these “nuances” in the social pro-
tection system. Even according to the preconceived plan, the government com-
pensated out price rise only state trade. But most of us also buy products at the
outdoor markets, at cooperatives and elsewhere.
      Besides, the amount of compensation is practically the same for all repub-
lics (the republican authorities have no right to pay less than the minimum
amount, but have no funds to pay more). Hence, the extent of these losses differs
depending on the level of cash incomes, the amount and pattern of consumption