Shift in tone

Medvedev said Russia's giant state-corporations, which were created during Putin's presidency from 2000 to 2008 and control large parts of the Russian economy, "have no future".

"The nation's prestige and welfare can't depend forever on the achievements of the past"

Dmitry Medvedev,
Russian president

"Inefficient companies must be liquidated, while those who are competitive must be transformed into joint-stock companies controlled by the government," he said in the speech at the Kremlin in Moscow, Russia's capital.

Analysts have said the structure of the state corporations, which oversee sectors like car manufacturing, aviation, nuclear energy and arms, has given vast powers to the associates who head them.

Neave Barker, Al Jazeera's correspondent in Moscow, said the president's speech was "a real departure from the kinds of speeches that have been given in previous years by previous presidents, including Medvedev himself".

He said during his address last year it was believed that Medvedev was speaking the words of Putin, when he issued a stern warning to the US not to repeat the mistakes of the past, just as Obama was being elected.

"But over the year it seems as if the tone has certainly shifted," Barker said.

"There are issues where Putin will continue to play a key role, but this was definitely a change of tone in terms of rhetoric coming from the Russian president."

'Achievements of the past'

Medvedev said the country has relied on an ageing Soviet industrial base and has had to draw most of its revenues from exports of energy resources.

"The nation's prestige and welfare can't depend forever on the achievements of the past," he said.

Years of burgeoning energy prices have stymied efforts to modernise the economy and created an illusion that structural reforms could wait, Medvedev told told hundreds of officials in an ornate hall.

The president insisted that modernisation would "be based on the values and institutions of democracy".

"Instead of an archaic society in which a few think and decide for all, we will be a society of smart, free and responsible people," he said.

But he also cautioned that "any attempts to rock the situation, destabilise the government and rend society under slogans of democracy must be stopped".