Which of the following is not a consequence of shock therapy?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Formation of the Eurasian Economic Zone.
Option (1) The value of the ruble declined dramatically. A consequence (Incorrect). Inflation was so high that people lost all their savings.
Option (2) The construction of democratic institutions was not given the same attention and priority as the demands of economic transformation. A consequence (Incorrect).
Option (3) Formation of the Eurasian Economic Zone. Not a consequence (Correct). Shock therapy brought ruin to the economies and disaster upon the people of the region: the largest garage sale in history, a falling ruble, a destroyed welfare system and new inequalities. Each of its consequences was damage done to the economy and society of these countries; the formation of a new economic zone is not one of them, so it does not belong in this list.
Option (4) The old social welfare was systematically dismantled. A consequence (Incorrect). The old system of social welfare was systematically destroyed, and the withdrawal of subsidies pushed many into poverty.
NCERT (2025-26): “Consequences of Shock Therapy … The shock therapy administered in the 1990s did not lead the people into the promised utopia of mass consumption. Generally, it brought ruin to the economies and disaster upon the people of the entire region. In Russia, the large state-controlled industrial complex almost collapsed, as about 90 per cent of its industries were put up for sale to private individuals and companies. Since the restructuring was carried out through market forces and not by government-directed industrial policies, it led to the virtual disappearance of entire industries. This was called ‘the largest garage sale in history’, as valuable industries were undervalued and sold at throwaway prices. Though all citizens were given vouchers to participate in the sales, most citizens sold their vouchers in the black market because they needed the money. The value of the ruble, the Russian currency, declined dramatically. The rate of inflation was so high that people lost all their savings. The collective farm system disintegrated leaving people without food security, and Russia started to import food. The real GDP of Russia in 1999 was below what it was in 1989. The old trading structure broke down with no alternative in its place. The old system of social welfare was systematically destroyed.… Consequences of Shock Therapy … The construction of democratic institutions was not given the same attention and priority as the demands of economic transformation.…” |