Arshad Shaikh describes the contribution made by Jamaat-e-Islami Hind in the field of Economics and Finance. While Jamaat’s contribution to Islamic banking and microfinance is significant and well-known, its position on various economic policies stems from its declared objective of “iqamat e deen”. Jamaat made a major contribution to the world of Economics by publishing foundational literature on Islamic Economics and the Islamic outlook on various modern economic theories. It has inspired many to take up the cause of Islamic Economics and Finance throughout the world.
Jamaat-e-Islami Hind (JIH) believes Islam presents a dependable and comprehensive view of life. It encompasses the entire spectrum of various domains and strikes a beautiful balance between the spiritual and the material. People should follow the guidance of the Qur’ān and the Sunnah of the Prophet Muhammad ﷺ in their individual and collective lives to achieve peace and success. Jamaat aspires to establish and uphold the Islamic way of life. In its quest to achieve this noble objective, JIH is at the forefront of establishing finance institutions for promoting interest-free banking and presenting Islamic economics and the Islamic financial system as an alternative to the prevailing conventional economics based on free markets and interest-based finance.
One of its aims is to develop an institution of research, studies, and training at the highest level of scholarship in Islamic economics and finance. Jamaat played a key role in forming microfinance societies aiming to provide interest-free microfinance options for reducing socio-economic disparities and to achieve justice and equity for educationally and financially backward sections of the public at large. It has a well thought out opinion about the economic policies of our country and believes that Islamic Economics and Finance has a lot to offer by way of solving the problems of poverty, unemployment, income inequality, large budget deficit, and high level of debt.
ISLAMIC BANKING
The contribution of Jamaat to Islamic banking is at two levels. One is setting the theoretical foundations for the fast-growing multi-billion dollar Islamic banking industry, which is now a significant player in the global financial system. The second is to advocate the cause of Islamic banking in India. Books such as Interest (Syed Abul Ala Maududi), Banking without Interest and Muslim Economic Thinking (Dr. Mohammad Nejatullah Siddiqi) gave impetus in establishing a new way of banking without the element of interest.
Jamaat has been at the forefront of convincing the authorities in India to start Islamic banking in India. One may recall that in its ‘People’s Manifesto’ released on the eve of Parliamentary Elections 2004, Jamaat reiterated, “The rise of interest as a gigantic social evil is alarming. One of the most gruesome dimensions of this draconian evil manifests itself in family suicides. Suitable amendments be made to the Banking Act to eliminate this menace and save society and our nation from the clutches of interest, facilitating the establishment of interest-free banks and interest-free financial institutions.”
The Islamic Centre of Islamic Finance (icif.org.in) networks individuals and institutions to collectively present before regulators, businesses, bankers, and political leaders to accommodate Islamic banking with conventional banking. ICIF has conducted several meetings, seminars, workshops, and interactive sessions to achieve these objectives. It has produced research material and documents to create awareness about the issue among the masses.
INTEREST-FREE MICROFINANCE
As part of its endeavour to help the poor and the marginalised, JIH took a keen interest in establishing a network of interest-free microfinance institutions to help those who lacked access to conventional banking and associated services. The Sahulat Microfinance Society (sahulat.org) was formed to promote interest-free microfinance (IFMF) activities in India. It establishes IFMF institutions under a credit-cooperative format as a sector.
Currently, 42 legal entities and 87 branches affiliate with Sahulat through a memorandum of cooperation. These legal entities are registered under various cooperative acts enacted by the state and central governments. Sahulat guides those institutions in cooperative principles, application of interest-free principles, compliance of financial prudence, professional governance, and indicators of social performance management.
Presently, Sahulat-affiliated credit cooperatives have reached around 220,000 members across 12 states, providing financial access for their consumption and business needs.
STAND ON VARIOUS ECONOMIC ISSUES
Jamaat feels the change in our economic policies (from a command economy to one that embraced privatisation, liberalisation, and globalisation) helped create a large pool of wealth, but the distribution was incorrect. These liberalised economic policies benefited only the capitalists and a limited segment of the urban elite. The concentration of wealth increased, and income inequality grew. Consequently, despite being one of the world’s leading countries in economic growth and the number of super-rich, we have not been able to erase the stigma of being the country with the largest number of poor.
Jamaat supports the policies of free trade according to the teachings of Islam. However, wealth creation should not reduce welfare. The role of the government is not merely that of a coordinator or a regulator. It should formulate policies for the equitable distribution of wealth and ensure that the benefits of development reach the backward, the poor, and those from rural areas. We must move beyond just the right to food to the cumulative needs of food, clothing, shelter, medical care, and education – i.e. The ‘right to livelihood’ should be recognised as a fundamental right of the people of India through a constitutional amendment. The government should increase its expenditure in the social sector to achieve these goals.
Our social spending should be on par with that of the developed countries and we must compete with them in social spending and not just economic growth. Policies such as reducing subsidies, reducing spending in social sectors, and concentrating our resources only on industry-friendly domains such as infrastructure development should be discouraged.
The principle of higher taxes on higher income should be adopted. Direct taxes should be increased and indirect taxes should be reduced so that the burden of inflation does not fall on the poor.
Jamaat feels that an interest-based banking system and financial speculation are one of the main causes of our economic woes. Vicious rates of interest on home loans should be strictly curtailed, interest-free banking should be permitted, and our country should seriously consider the just Islamic economic system, which is free from interest and speculation. Jamaat has regularly sent suggestions to the government before the Union budget, urging it to increase the budgetary allocation for health and education.
AN UNFINISHED TASK
The project to establish Islamic Economics and Finance is still a work in progress. There is a lack of qualified resources that possess the knowledge and expertise in both conventional economics and the Islamic approach to utilise and manage the available resources in the best possible manner. Moreover, it is a well-accepted fact that Islamic Economics has been overshadowed by Islamic Finance.
The ascendance and rapid growth of Islamic banks throughout the globe have sparked accusations that it is just a “halal” alternative to conventional banking and does not help the cause of the “maqasid e sharia” (noble objectives of the Islamic Shariah).
Jamaat is making all efforts to revive the project of Islamic Economics. However, it is handicapped by the declining graph of “humanities” in academia. The “deenimadaris” are yet to come out with significant research and knowledge about the Islamic approach to running an economy in a language that can be understood by mainstream economists.
The only positive aspect is the growing interest in “heterodox” economics throughout the world in the wake of the failure of capitalism and communism to address the challenges of the creation and distribution of wealth.