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Q10. What was the New Economic Policy of USSR and why was it implemented?

New Economic Policy (NEP) was the economic policy of USSR in period of 1921 to 1928, representing a temporary retreat from its previous policy of extreme centralization and doctrinaire socialism. The New Economic Policy was cleverly created curing a time of dire economic failure, famine, and unemployment. The NEP advanced with almost a capitalist approach to economic growth. The policy of War Communism, in effect since 1918, had by 1921 brought the national economy to the point of total breakdown.

There was a rebellion by the Kronshtadt in March 1921 by the naval sailors who were the staunch supporters of Russian Revolution which convinced the Communist Party and its leader, Vladimir Lenin, of the need to retreat from socialist policies in order to maintain the party’s hold on power.

In the 10th Party Congress in March 1921, USSR introduced the measures of the New Economic Policy. These measures included the return of most agriculture, retail trade, and small-scale light industry to private ownership and management while the state retained control of heavy industry, transport, banking, and foreign trade. Money was reintroduced into the economy in 1922 (it had been abolished under War Communism). The peasantry were allowed to own and cultivate their own land, while paying taxes to the state. The New Economic Policy reintroduced a measure of stability to the economy and allowed the Soviet people to recover from years of war, civil war, and governmental mismanagement. The small businessmen and managers who flourished in this period became known as NEP men.

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