USSR: ECONOMIC PLAN FOR 1983

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85M00364R000300330008-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 21, 2016
• Document Release Date: May 6, 2008
• Sequence Number: 8
• Publication Date: June 1, 1982
• Content Type: REPORT

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The economic goals for 1983 announced by State
Planning Commission chairman Baybakov at the
meeting of the Supreme Soviet last month reflect
tacit abandonment of the original targets of the
1981-85 Plan. The more modest growth rates.
planned for 1983 are nonetheless substantially
higher than those achieved in 1981-82 and suggest
unrealistic expectations for gains in efficiency and
productivity. The projected rise in outlays on pro-
ducer durables implies that spending on military
hardware will rise only slightly in 1983, if at all.
Neither the plan nor Andropov's speech to the
Central Committee Plenum on 22 November point
to major changes in the way the USSR is run.
Andropov's stress on the need for more managerial
autonomy in operational matters, closer linkage of
rewards to worker productivity, and stricter en-
forcement of discipline among workers and manag-
ers alike represent changes in emphasis, not
marked departures from the policies and methods
of economic management under Brezhnev. The
plan guidelines had been in process for months and
had received approval of the standing commissions
of the Supreme Soviet by mid-October. Thus the
new plan should not be considered an Andropov
plan and budget except insofar as-his influence and
that of his supporters became stronger in the last
months of Brezhnev's rule.
Preliminary Results for 1982
Data announced to the Supreme Soviet by Bayba-
kov indicate that economic growth this year, al-
though positive, has once again been slow. The
implied growth rate for GNP in 1982 is about 1.6
percent. Industrial output, which grew by a post-
World War II low of 2.2 percent in 1981, will
increase even less this year-about 1.5 percent.
Indicators of Soviet
Economic Performance
a Preliminary.
1980
1981
1982 a
1983
Plan
1.5
1.8
1.6
4.0
2.9
2.2
1.5
3.2
-3.7
-1.2
2.0
10.7
Domestic farm output will rise by only about 2
percent, making 1982 the fourth consecutive poor
year for Soviet agricultu . We estimate that the
1982 grain crop will only be about 165 million tons.
The most serious development for the new leader-
ship this year is that already serious bottlenecks
have intensified. Shortages of raw materials, fuels,
and power have disrupted production and reduced
output in almost all sectors of the economy. Most
critical perhaps were the dislocations caused by the
poor performance of the ferrous metals industry
and the railroads. Shortfalls in the production of
steel have become a major obstacle to growth in
civilian machine building and other priority sectors.
The railroads, which bear the brunt of the transport
burden in the USSR, appear to have reached their
capacity. We estimate that freight turnover on the
railroads will fall this year for the first time
since 1979. Rail transport problems have become so
serious that Andropov singled them out for special
criticism in his speech to the Central Committee
and subsequently fired Minister of the Railroads
Pavlovskiy.
Secret
GI JEEW 82-049
10 December 1982
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Growth of Freight Percent USSR: National Income
Turnover in the USSR
Average Average Annual
Annual Estimated Planned for
1976-80 1981 1982 1981-85
The announced targets for 1983 are somewhat
more modest than those implied in the original five-
year plan, but substantially higher than achieve-
ments in 1981-82. The implied rate of growth for
GNP, for example, is 4 percent, up sharply from
the growth rates achieved in 1981 and 1982. Soviet
planners also expect a sharp rebound in agricultur-
al production and a near doubling in the rate of
growth of industrial output.
Almost all of the planned increase of 15 billion
rubles in national income is slated for the consump-
tion fund, which includes the consumption of goods
by the population and the use of goods to furnish
public services (for example, health) and govern-
ment administrative services (including research
and development). The accumulation fund-which
covers outlays for net civilian investment, military
investment (construction, procurement, and major
repairs), and inventory change-seems to be con-
tinuing the very slow rise evident since 1980. With
some growth planned in gross civilian investment,
there seems to be little or no growth planned for
military investment in 1983.
Strategy for Doing Better
1980 1981 1982? 1983
Plan
National income utilized 437 451 460 475
Consumption fund b 329 342 350 362
Accumulation fund 108 109 110 113
a Preliminary.
b Baybakov said that the consumption fund accounted for 80 precent
of national income in 1982. This, however, probably represented
some rounding up. We have estimated the share for 1982 at 76
percent; the share for 1981 was 75.8 percent; and the share planned
for 1983 is 76.3 percent.
would not solve the country's economic problems.
But Andropov gave no indication last month that
he intends to introduce major changes, at least in
the near term. Judging by his remarks, only
changes in emphasis are to be expected-for exam-
ple, more autonomy for managers in implementing
the plan and imposition of greater discipline on
Soviet workers.
In any event, formulation of a clearly articulated
economic policy by the new regime would require a
consensus on how best to revive economic growth.
Most of the key actors in the new leadership have
been closely associated with a concept of more
investment in heavy industry (particularly machin-
ery), and some aspects of the 1983 Plan and budget
suggest a move in that direction has already been
set in motion. For example, growth in the machin-
ery and equipment component of investment has
been stepped up. Construction activity is to remain
level. But to raise the return on construction, the
Soviets aim to reduce by roughly 5 percent the
inventory of uncompleted projects, which has
climbed by more than 13 percent in the past two
years.
Andropov spoke candidly about the disappointing
Soviet economic performance in recent years and
implied that bold steps were called for, caustically
observing that empty slogans and exhortations
Secret
10 December 1982
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Greater Investment in Machinery
Investment in machinery and equipment, acceler-
ated in recent years by Brezhnev, will be increased
even more and channeled directly into those sectors
of the economy where current bottlenecks are
impeding production. Andropov identified those
sectors as fuel and energy, ferrous metallurgy,
chemicals, timber, wood processing and paper, ma-
chine building, and construction materials.
Carrying out this strategy will be difficult. During
the past few years, growth in domestic machinery
production-the source of consumer durables, pro-
ducer durables, and military hardware-has been
slowed by stagnation and even decline in the output
of steel and nonferrous metals. The 1983 Plan, in
fact, calls for an increase of only 4.8 percent in
machinery production-the lowest planned growth
since World War II. Imports of machinery and
equipment will not help much. They have been
declining since 1976 and are not likely to pick up
substantially in 1983. While some drawdown in the
inventories of uninstalled equipment is planned,
this source of machinery is insufficient to account
for the planned acceleration in the growth rate of
machinery investment-from an average increase
of 4 percent per year in 1980-82 to 7.9 percent in
1983. Since the 1983 Plan also calls for a continued
rapid rise in the production of consumer durables,
the implied increase in producer durables (that is,
machinery and equipment for investment) may
mean that production of military hardware is to
level off.
Indeed, in the past few years, Soviet military
procurement has not grown as rapidly as in the
1970s. There is some evidence of delays in the
introduction of several new weapons systems into
the military arsenal. These systems include two
new ICBMs and an SLBM, a guided missile
cruiser, and several new fourth-generation tactical
aircraft. The Soviets' decision to remain within the
SALT II constraints, technological problems, and
resource limitations related to the economy's poor
performance appear to be the principal contribut-
ing factors.
The duration of any slowdown in the growth of
military hardware production would depend on how
the leadership uses the planned increase in produc-
er durables. If a large part of the increment is used
to retool and expand defense industries, the growth
in military hardware production could surge again
by mid-decade. The Soviets have a large number of
military development programs under way that
could support such an increase, and they continue
to expand their defense production facilities. On
the other hand, if Moscow opts to concentrate the
bulk of the increase on modernizing civilian indus-
trial plants, military hardware production would
have to grow slowly over a longer period. General
Secretary Brezhnev may have been hinting at such
an eventuality when he reminded the military
leadership on 27 October that there are important
bottlenecks in the economy and urged them to
make better use of the resources they have been
given.
Some of the runup in machinery investment will be
channeled into the energy sector where investment
needs are rising at ever-increasing rates, particular-
ly to exploit the oil and gas fields of West Siberia.
Investment in fuels, power, and oil and gas pipe-
lines was slated to rise by 50 percent during 1981-
85. Although the 1983 Plan did not reveal any
investment targets for the energy sector, Andropov
indentified fuel and energy as one of the sectors
into which more machinery is to be channeled.
Indeed, the plan goals for output of oil, gas, and
coal, as well as pipeline construction, cannot be met
without continued large increments in investment.
General Secretary Andropov's nod of approval to
the Brezhnev Food Program ensures continued
allocations of machinery and equipment to agricul-
ture in an effort to reduce waste and losses and
improve rural infrastructure. Investment in the
entire agro-industrial complex is planned to rise
over 4 percent next year and-consume almost one-
third of total capital investment. The sharp re-
bound planned for agricultural output in 1983,
however, suggests that the leadership may be bet-
ting as much on a break in the weather as they are
on the role of investment.
Secret
10 December 1982
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The new plan seems to be based on tighter disci-
pline in economic management. Wages, tenure, and
promotions are to be more closely geared to the
quality of job performance. At the same time, a
more hardline approach toward the management of
the economy is being taken by placing stricter
limits on the use of all kinds of production re-
sources, particularly metals and fuels, and on the
size of the labor force individual enterprises can
employ. Overall discipline is to be tightened. Brezh-
nev frequently spoke in similar rough terms in the
past but never went further than singling out
ministers for criticism. Andropov has already fired
two ministers-the Railroad Minister and the Min-
ister of Rural Construction, Stepan Khtrov-and
others may soon follow.
The 1983 Plan and budget also reflect continued
efforts to bring consumer incomes into line with the
availability of goods and services. The increases in
monthly wages of workers and employees and
collective farmers will be smaller next year, rising
by 1.9 percent and 2.1 percent, respectively, follow-
ing gains of 2.6 percent and 4.0 percent, respective-
ly, in 1982. Retail trade turnover in current prices
is planned to expand by 5.4 percent in 1983 after a
4.6-percent increase in 1982.
If Andropov has an agenda for reform, he did not
tip his hand at the recent party and government
meetings. At most, he called for cautious experi-
mentation and careful examination of the experi-
ence in other socialist countries. The promotion of
Nikolay Ryzhkov to the Central Committee Secre-
tariat and of Gaydar Aliev to the post of First
Deputy Chairman of the Council of Ministers do
not suggest that economic reform is a pressing issue
for Andropov-at least if he supported rather than
acceded to these promotions. Ryzhkov's back-
ground is that of a typically successful Soviet
engineer-manager who has grown up under the
current system. His article on the economy in the
Secret
10 December 1982
USSR: Selected Indicators
of Consumer Welfare
1979
1980
1981
1982- 1983
Plan
Average monthly wages of
workers and employees
Rubles
163.3
168.9
172.5
177.0 180.4
Percent increase
2.1
3.4
2.1
2.6 1.9
Average monthly
collective
farm earnings
Rubles
113.6
118.0
122.4
127.3 130.0
Percent increase
3.7
3.9
3.7
4.0 2.1
Retail trade turnover
(state and cooperative)
Billion current
rubles
254.0
270.5
285.5
298.6 314.6
Percent increase b
5.3
6.5
5.5
4.6 5.4
3 Preliminary.
b These official Soviet data probably are biased upward by 1 to 2
percentage points.
August 1982 issue of Planovoye khozyaystvo con-
veys the impression of a person who fully under-
stands the need to install efficiency in the Soviet
economy, is prepared to be a forceful administra-
tor, but who iF not likely to depart from the
conservative approach to planning and manage-
ment mandated in the July 1979 reform decree and
followup resolutions.
Similarly, Azerbaijan first secretary Aliev, promot-
ed to the post of First Deputy Chairman of the
Council of Ministers and possibly being groomed as
a replacement for Council Chairman Tikhonov,
was probably brought to Moscow because of the
success he has achieved in making the current
system work. Aliev was not identified, as were some
other local leaders, with any reform experiments.
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Foreign Trade
Given the tightness in domestic supplies, Soviet
planners could well be looking toward foreign trade
to help offset reductions in planned production and
consumption goals. For example, imports of gas
and oil equipment, steel, chemical equipment, and
technology are needed to bolster production in key
industrial areas, and imports of grain and other
agricultural commodities are badly needed to sup-
plement domestic farm output.
Nonetheless, the foreign trade plan for 1983 sug-
gests that Moscow is unsure of its ability to earn
the currency to pay for imports from the West and
instead is relying on greater imports from socialist
countries. In his report to the Supreme Soviet,
Planning Chairman Baybakov said that the
USSR's trade with socialist countries would in-
crease by 7.7 percent and their share in total Soviet
trade turnover would reach 58 percent. Baybakov's
statements imply that the total volume of trade will
grow by less than 6 percent and that trade with
nonsocialist countries will decline.
In designing its economic policies the Andropov
politburo will have to contend with a growing
malaise in Soviet society. The sources of popular
discontent-a perceived decline in the quality of
life, continuing restrictions on freedom of expres-
sion and belief, and rising national consciousness
among some of the more than 20 major ethnic
groups-pose problems of varying severity for the
leadership.
The new leaders also must come to grips with the
question of how dependent they want to be on
Western goods, particularly farm products and
technology. This issue is tied closely to their domes-
tic investment policy. For example, continued pur-
chases of Western farm products on the scale of
recent years might permit some cutback in invest-
ment resources committed to agriculture. The out-
look for Soviet hard currency earnings, however,
suggests that to pay for rising imports from the
West, the USSR will have to increase its borrowing
markedly or arrange a large number of projects
that offer Soviet raw materials in return for West-
ern technology.
The economic policies laid out by Andropov thus
far are well within the borders of those established
during the Brezhnev years. However, major policy
changes could lie ahead. Pressures will intensify to
forcefully tackle the tough issues of resource alloca-
tion and to improve on the management of the
economy. Specifically, Andropov must decide (1)
whether to continue Brezhnev's agricultural poli-
cies, which have consumed so much of Soviet
investment resources; (2) whether the country can,
and should, step up the pace of investment in the
last half of the 1980s, perhaps at the expense of
some slowdown in defense spending; and (3) wheth-
er the system can, or should, institute any manage-
rial reforms.
Secret
10 December 1982
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