New Economic Policy 1921


Key Features of the New Economic Policy

Grain Requisitioning abolished- it was replaced by a 'tax in kind'. Peasants had to give a fixed proportion of their grain to the state, but the amount that they had to hand over was much less than the amounts taken by requisitioning. They could sell any surpluses on the open market. 

Small businesses reopened- small scale businesses under private ownership were allowed to reopen and make a small profit. This included businesses like small workshops and factories that made goods such as shoes, nails and clothes. Lenin realised that peasants would not sell their produce unless there were goods that they wanted on sale. 

Ban on private trade removed- the removal of the ban on private trade meant that food and goods could flow more easily between countryside and the towns. Privately owned shops were reopened. Rationing was abolished and people had to buy food and goods from their own income. The money economy was back!

State control of heavy industry- The state kept control of large-scale heavy industries like coal, steel and oil. It also retained control of transport and the banking system. Industry was organised into trusts that had to buy materials and pay their workers from their own budgets. If they failed to manage their budgets efficiently, they could not expect the state to bail them out 

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