question_answer

The value of the ruble 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 the government started to import food. The old trading structure broke down with no alternative in its place. The old system of social welfare was systematically destroyed. The withdrawal of government subsidies pushed large sections of the people into poverty.

Read the above passage carefully and answer the following questions:

(i) What is meant by subsidy?

(ii) How did the disintegration of collective farm system lead to the loss of food security?

(iii) This passage is associated to which country? Why did the government start importing food?

Answer:

(i) Subsidy is the help usually provided by the government to keep the price of a product or service low as compared to the open market price.

(ii) Collective farming was to be replaced by private farming which meant food grains to be purchased from the open market. The government had no control over the prices as well as the stock. This created loss of food security.

(iii) (a) This passage is associated with Russia.

(b) The government started importing food due to scarcity of food grains and privatization of agriculture.