Which of the following statements are correct about “shock therapy”?
A. Private farming replaced by collective farming
B. Openness to foreign direct investment
C. Currency convertibility
D. Deregulation
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → B, C and D only
A. Private farming replaced by collective farming Incorrect. It was the other way round: collective farms were to be replaced by private farming and capitalism in agriculture.
B. Openness to foreign direct investment Correct.
C. Currency convertibility Correct.
D. Deregulation Correct.
NCERT (2025-26): “Shock Therapy in Post-Communist Regimes … Each of these countries was required to make a total shift to a capitalist economy, which meant rooting out completely any structures evolved during the Soviet period. Above all, it meant that private ownership was to be the dominant pattern of ownership of property. Privatisation of state assets and corporate ownership patterns were to be immediately brought in. Collective farms were to be replaced by private farming and capitalism in agriculture. This transition ruled out any alternate or ‘third way’, other than state-controlled socialism or capitalism. Shock Therapy in Post-Communist Regimes … Shock therapy also involved a drastic change in the external orientation of these economies. Development was now envisaged through more trade, and thus a sudden and complete switch to free trade was considered essential. The free trade regime and foreign direct investment (FDI) were to be the main engines of change. This also involved openness to foreign investment, financial opening up or deregulation, and currency convertibility.…” |