Corruption permeated every aspect of life in Georgia. But just in few years, the country had an overhaul of system to root out corruption.
Until 2003, Georgia’s situation was very similar to that of India. Corruption permeated every aspect of life in the country. Extortion of bribes from traffic police and other state authorities on fabricated charges was prevalent. The law and justice systems were completely broken. Tbilisi was operating an anti-prosperity machine comparable to the licence, permit, quota Raj that is everywhere in India.
Rose Revolution in Tbilisi
Things changed after the Rose Revolution in November 2003. Large crowds carried roses, symbolising peaceful demonstrations, and unknowingly made way for a complete overhaul of the country’s system. The new government that was sworn in 2004 was determined to root out corruption from the country and to everyone’s astonishment, it did deliver on its promise.
A small team in the executive branch, supported by the Parliament and Judiciary, brought in long-lasting reforms to the country and put it on the path to prosperity.
Here is a list of key reforms that led to corruption-free Georgia:
Education:
1. A Higher Education Law introduced new accreditation procedures. (It curbed corruption in licensing of academic institutions).
- 2. Another law on Education Quality Enhancement enhanced quality assurance mechanisms. Licensing and accreditation of academic institutions was changed to a more decentralised process overseen by an agency autonomous from the education Ministry. The corrupt academic elites were side-lined in this process.
- 3. University leadership was reshuffled, and influence of powerful heads was curtailed.
- 4.Significant changes were made in academic staffing to ensure that positions are being filled on basis on merit, as opposed to the practise of hiring relatives and friends of the past.
- 5.All academic staff at Tbilisi State University were dismissed had to reapply under a new selection process based on merit.
- This helped academic institutions to reduce their numbers of professors and create better paying jobs, lessening the incentive for corruption.
- 1.An Anti-Mafia law was passed which allowed persecuting and convicting persons for crime of being members of mafia groups and allowed confiscation of property acquired through corrupt practises.
- 2.The traffic police (GAI) was entirely disbanded with 16,000 officers being dismissed overnight. A new 2,400-strong Patrol Police were hired with higher salaries, new equipment and better code of ethics. Ever since, the average police salary has increased fifteen-fold, and total staff of law enforcement agencies has reduced from 63,000 to 27,000.
Civil Services and Regulatory Bodies
- 1.To avoid duplication of functions, overlapping of authority and scope for extorting bribes, a new law on structure, authority and regulation of government of Georgia was passed. This reduced the number of ministries from 18 to 13.
- 2. A new law on local self-government was adopted which consolidated local governments from 1100 to 67. In October 2004, the first municipal elections of mayors took place based on the new structure of local government.
Market Liberalisation
- 1. A new tax code was implemented which reduced the taxes from 22 to six, while slashing the rates too.
- 2. An e-filing system was adopted which reduced interaction between taxpayers and officials. It also unified tax and business registration.
- 3.To further reduce opportunities for corruption, the tax service stopped accepting hard copies of tax declarations.
According to Forbes, Georgia has the fourth lowest tax burden in the world after Qatar, the UAE and Hong Kong. The business environment benefited greatly from the tax reforms. - 4. A law was passed that defines all types of activities that required a license or permit. From 909 licenses and permits, only 109 licenses and 50 permits remained. In total, 70 percent of the licenses and 90 percent of the permits were removed.
- 5.Over 4,000 state assets were sold off to private owners resulting in a total of $1.60 billion state revenues. Due to market-oriented policies, the country improved from 112 to 9 between 2010 and 2018 on World Bank’s “Ease of Doing Business” index.
With these changes, Georgia achieved strong results in overcoming corruption and established a transparent system. Between 2003 and 2016, the per capita income of Georgia increased from $928 to $3853. The structural economic reforms transformed the country from a poor country to a lower middle-income country. Georgia now ranks 16th on the Index of Economic Freedom.
Even as Tbilisi has a long road ahead, it could serve as a model for India to follow. It has shown that the anti-prosperity machine established on a failed ideology can be reversed to put a country on the path to prosperity.
