Russia May Boost Social Programs : Reforms: Prime minister admits mistakes and says plan is needed to bolster government’s popularity after poor election results. Yeltsin has indicated he is willing to soften the economic pinch.

The Russian government offered new signals Saturday that it may boost social programs, ease budgetary restraints and pump more money into industry and agriculture in response to reformists’ poor election performance.

Prime Minister Viktor S. Chernomyrdin said in an interview published Saturday that the government plans to bolster its popularity by beefing up social programs to help people hurt by Russia’s radical economic reforms.

“The reforms themselves were extremely necessary. And that they were carried out decisively is correct, a great deed,” he told the Trud newspaper. “But it is also true that serious mistakes were allowed and that nobody thought about the near future and the people for whose sake the reforms were started.

“We shouldn’t blame the people, but rather admit our own mistakes,” he said.

The inflation and economic upheaval unleashed by the reforms are held largely responsible for massive voter support for ultranationalist Vladimir V. Zhirinovsky in last Sunday’s parliamentary elections. Strongly pro-reform candidates are expected to gain only between one-quarter and one-third of the new Parliament’s seats.

“To tell the truth, many people voted perhaps not so much for a party’s concrete platform as against the difficulties and mistakes of ongoing reforms,” Chernomyrdin said. “As many as 35 million Russians live below the poverty line, which means that some 30% of voters were potentially ‘against’ (the government).”

President Boris N. Yeltsin has not yet announced how he plans to respond to the election results, although he assured visiting Vice President Al Gore last week that reforms would continue. Administration officials have indicated, however, that holding Russia to a strict schedule of economic reforms could be counterproductive if it erodes the nation’s political stability.

There have been indications since the day before the elections, when Yeltsin suddenly raised pensions and increased the minimum wage, that the Russian president is now willing to ease monetary policy to soften the economic pinch most Russians are feeling.

On Friday, the Reuters news agency reported that Yeltsin had agreed to give $120 million in low-interest loans to factories that produce agricultural machinery. On Saturday, Yeltsin issued a decree ordering the Finance Ministry to help state-run television stay solvent. Chernomyrdin also said that Russia plans to lend about $400 million to former Soviet republics so they can settle their debts with Russian industries.

None of the sums involved is very significant against the backdrop of Russia’s large economy, but “allocation of this money is a measure from the arsenal of concessions,” economist Pavel Bunich said.

Deputy Prime Minister Yegor T. Gaidar, the architect of Russia’s economic reforms since late 1991, has waged an unending battle against the Russian government’s policy of printing money to provide loans and cheap grants to factory directors and farmers.

Now the head of the pro-Yeltsin Russia’s Choice bloc, Gaidar told a post-election news conference that the election results mean that his program had not been radical enough, that he should have pushed harder to cut spending and fight inflation.

He and Chernomyrdin, who has always backed more support for industry, now appear poised for a major battle, with each of them having drawn opposite lessons from the elections.

Chernomyrdin told Trud that his government’s top priority must be the fight to stop Russia’s drop in industrial production. That means, he said, that “our main efforts will be directed toward investing money in the creation of new productive power,” retooling factories that show promise and “bulldozing” those that do not.

He said Gaidar’s tough financial policy has brought inflation down to 16% per month--compared to nearly double that last fall. The government budget deficit will not top 10%, he said, compared to 30% in 1991.

“The mechanism of financial stabilization has been launched,” he said. “Now investment in industry comes onto center stage.”

Gaidar can expect a fight not only over the budget but over the giant government program to turn state-owned enterprises into private or joint-stock concerns. The privatization program has gained a reputation as one of the most successful of Russia’s reforms, and Gaidar has said it absolutely must be allowed to continue in its current form.

On Friday, however, the government gave preliminary approval to a draft privatization plan that spawned serious arguments within its ranks. Some reports from the meeting indicated that Gaidar and his ally, privatization chief Anatoly B. Chubais, argued hotly against changes proposed in the program by more conservative ministers.

Yeltsin’s position on the infighting in his government usually comes across either through the decrees he signs or the hiring and firing he does. This time around, in the wake of the elections, he has fired several advisers as well as the head of Ostankino, Russia’s main television station.

But ultimately, some observers say, it appears more and more likely that Yeltsin may have to choose between Chernomyrdin, with his more free-spending policies, and Gaidar, who wants to get even tougher financially to fight inflation.

“There are three possible policies now,” Bunich said. “One is to change nothing, another is a tougher policy, and the third is a softer one. If Yeltsin makes it at least a little bit softer, that would only be for the better.”