Monetization of benefits was carried out in 2005. It envisaged the abolition of a number of social guarantees for a certain category of the population. This reform provoked massive protests in the country. Let us further consider its main provisions.
History reference
The preferential system was introduced back in Soviet times. At that time, social guarantees were in effect, combined with the then existing regime of the state economy. Benefits served as an incentive for certain relatively few sections of the population who had special merits for the country. In the 80-90s of the last century, the number of social guarantees significantly expanded. Moreover, the benefits themselves were aimed at supporting the population in the absence of money in the budget and inflation. Meanwhile, many benefits did not receive real security, and the number of citizens who formally fell into the category of needy exceeded half the total population. Typically, the monetization of benefits in Russia is associated with the names of the Deputy Prime Minister Zhukov and the Minister of Social Development and Health Zurabov. 
Theft of funds and corruption
The authorities pointed out significant violations of the law by state bodies as justifications for the reforms. For example, in the field of the supply of medicines, channels were actively operating through which public funds were received for the free provision of medicines to beneficiaries. The actual dispensing of drugs was carried out in much smaller amounts. In the transport sector, relatively high prices for services have been established. The reason for this was corruption. The high cost of services was justified by interested officials by the need to serve beneficiaries. There have been abuses in the field of spa treatment. Ordinary veterans had to wait in line for many years to take the opportunity to visit preventive facilities for free. The monetization of benefits, according to the government, could eliminate all these violations.
Problems in the transport sector
The law on the monetization of benefits could, as authorities considered, stop the degradation of municipal transportation. People who constantly used public transport naturally sought to get free travel. As a result, more than half of all trips ceased to be paid. At the same time, the lack of information about the actual services provided to beneficiaries makes it possible in some cases to dislodge disproportionately high budgetary subsidies for municipal and sometimes private transport enterprises through corruption. In addition, they remained unresolved and new problems began to arise in the field of rail transportation. Monetization of benefits would allow to return about 6 billion rubles to the sector. 
Obstacles to Reform
The preferential system did not apply to villagers. In this regard, the population of the countryside was virtually out of work. The monetization of benefits would eliminate the injustice of access to social guarantees. At the same time, those people who already use them, having received the money, could spend them at their own discretion. The monetization of benefits for pensioners would help to remove obstacles to reform not only in the field of transport, healthcare, but also housing and communal services and natural monopolies. The introduction of competition in the market was complicated by the fact that it was not clear who would finance social guarantees to citizens.Accordingly, there was no actual attraction of private capital in housing and communal services and transport, in natural monopolies, because investors did not have confidence in the full payment by consumers of the services they supply. 
Key Points
At the beginning of the reform, categories were identified to which the new order would apply. Federal reform affected, respectively, exclusively federal beneficiaries. Three types of guarantees fell under the conversion:
- Travel by city and suburban public transport.
- Spa treatment.
- Providing free medicines.
With regard to the abolition of benefits for housing services, it was postponed until after the 2008 elections.
Payouts
To compensate for the benefits, 171.8 billion rubles were provided. However, the government actually spent a much larger amount. Monetization of benefits for persons with disabilities was carried out in accordance with the group. So, for 1 gr. since childhood, 1.4 thousand rubles, 2 grams were provided. - 1 thousand p., 3 gr. - 800 p. Compensation "Chernobyl" was 1.7 p., Donors - 500 p. Payments of 3.5 thousand rubles were envisaged for the heroes of the Second World War, they planned to give out 1.1 thousand rubles to the blockade, and two thousand rubles for the disabled. These payments replaced the right of free travel in suburban and city transport, sanatorium treatment and medicines. The initial proposals of the Ministry of Finance contained about 10 benefits to be replaced. 
The situation in the subjects of the country
Monetization benefits to labor veterans and other citizens who received regional social guarantees, could not be carried out. The solution to this issue was left to the discretion of the authorities of the subjects. Regional administrations could also maintain existing benefits. In this case, they needed to independently finance the services of transport and other enterprises that were provided to citizens free of charge. When conducting monetization, the federal government declared the payment of up to 40% of the corresponding compensation to the regions.
Population protests
In 2004, on July 29, a rally of Chernobyl victims was held in Moscow. Since the beginning of August, mass protests have taken place in almost the entire country. The implementation of the reform in practice has caused discontent among the majority of citizens. The bulk of the protesters consisted of retirees. Protests have gained wide scope in large cities. The mayor of Luzhkov, who was at that time, found money to compensate for benefits from the city budget. In St. Petersburg, the situation was not so prosperous. The protesters demanded the speedy repeal of the adopted Law No. 122, which regulates monetization. 
Problem Solving
Vladimir Putin met with the cabinet. In January, he proposed indexing pensions from March 1, and not from April 1, as planned. In addition, he instructed to raise the military monetary allowance. Throughout 2005, the government, together with regional administrations, took certain measures to reduce tensions. In some subjects compensation payments were raised to a level that suited pensioners. Gradually, the protests began to subside.
Reasons for Reform Failure
First of all, monetization is a rather complicated, from a technical point of view, procedure. Many regions and individual officials were simply not ready for such a massive transformation. As a result, the actions of managers were not thought out. Along with this, monetization was supposed to be a tool to eliminate corruption. In this regard, a certain part of the state apparatus was not interested in reform. When planning monetization, the gap between the period of receipt of payments (end of January 2005) and the fact that the abolition of benefits was introduced at the beginning of the month was not taken into account.
Despite the fact that the funds were transferred in advance, the long New Year holidays and the current transfer system did not allow to convey them to citizens in a timely manner. Not always payments could compensate for the abolition of benefits.In general, the reform would help citizens, however, due to the uneven distribution of losses and benefits, it failed. Ordinary pensioners were especially affected. The resolution of the issue on these citizens was referred to the competence of the regions. The federal legislation does not say about these beneficiaries. Some regions were able to resolve the issue, while others did not because of the lack of sufficient funds. 
Conclusion
Monetization aroused great discontent among poor citizens. But it is worth noting that many transport and other service enterprises were to some extent pleased with the reform. They were able to get real money and direct them to the development of the sector. Many enterprises proposed to modernize the park through monetization. Nevertheless, citizens had to return certain social guarantees. After large-scale protests, a new demonetization program was developed.
