B- BASED ON HOUSEHOLD INCOME: Distribution of households according to the level of income can be taken as another basis of estimating payable amount of Zakat. It may be noted that Zakat is paid out of surplus income over a period of one year and not on the income itself. In the absence of the required information about individual/households savings, while it may be presumed that total income has been consumed leaving no surplus hence no Zakat, it may also be presumed that people with comfortable level of income create assets like gold, etc. over a period of time and hence pay Zakat. More specifically it may be presumed that households with current level of income are also holding similar level of assets qualifying for Zakat payments. Here the later assumption is taken as the basis of estimation of Zakat in India
The Statistical Outline of India 2004-05 provides the estimated number of households by income groups 2001-02 at the prices of the same year in India. According to this estimate, households falling under different categories are as below:
- Up to Rs. 90,000/- 1353 (lakh) 71.94%
- Up to Rs. 90,000 to 200,000 412.7 21.93
- Up to Rs. 200,000 to 500,000 90.3 4.8
- Up to Rs. 500,000 to 10,00,000 17.3 0.92
- Up to Rs. 10,00,000 to 20,00,000 5.46 0.29
- Up to Rs. 20,00,000 to 50,oo,000 2.02 0.11
- Up to Rs. 50,00,000 to 100,00,000 0.3 0.02
- Above Rs. 100,00,000 0.2 0.01
This pattern obviously includes Muslim households too. Now let us see what happens to the payable Zakat amount when all categories pay Zakat at the following rate only:
1- 72% of 13818830 i.e 9949557 pay @ Rs. 2250/- =Rs.22386504600
2- 22% of 13818830 “ 3040143 “ “ @ Rs. 3600/- =Rs.10944514800
3- 4.8% of “ ‘663304 “ @ Rs. 9000/- =Rs.5969736,000
4-. 92% “ “ 127133 “ @ Rs. 19000/- =Rs2415531 000
5-. 29% “ “ 40075 “ @ Rs. 38000/- =Rs.1522850 000
6-. 11% “ “ 15200 “ @ Rs.88000/- =Rs. 1337600,000
7-. 02 % “ “ 2764 “ @ Rs.189000/- = Rs. 522396000
8-. 01% “ “1382 “ @ Rs. 300,000/- =Rs. 414600,000
This sum totals to RS. 45,51,37,31,000
It may be noted that these calculations are made on the basis of the assumption that only 50% of the Muslim families /households in India are Sahib-e-Nisab and therefore pay Zakat.
C– BASED ON POVERTY LEVEL
According to Economic Survey of India 2004-05, only 26 per cent of the Indian population lives below poverty line. Unfortunately 55.48 per cent of Muslims of India live in the states of UP, Bihar, Jharkhand, West Bengal and Assam where poverty is reported to be higher than the national average, say around 40%. There is a general understanding that Muslims are economically far behind others. Hence it may be assumed that 60 per cent Muslim families in these five states and 40 per cent in all other states are poor and not Sahib-e-Nisab. It amounts to say that 50% Muslim households are on or below poverty line and therefore do not pay Zakat. Every person above poverty line may not necessarily be Sahib-e-Nisab. It is however, for the sake of simplification, assumed that persons above poverty line are Sahib-e-Nisab. This may not be exaggeration, keeping in view the assumed higher percentage of population below poverty line. It means that average 50 per cent of Muslims of India are Sahib-e-Nisab. It implies that 13818824 say 13818830 families pay little or more amount of Zakat. Let us assume that the payers pay Zakat at varying rates per family as below:
First 10 % pay @ Rs. 1000 per family i.e. Rs. 1381883
Second 10 % pay @ Rs. 2000 per family i.e. Rs. 2763766
Third 10% pay @ Rs. 3000 per family i.e. Rs. 4145649
Fourth 10% pay @ Rs. 4000 per family i.e. Rs. 5527532
Fifth 10 % pay @ Rs. 5000 per family i.e. Rs. 6909415
Sixth 10 % pay @ Rs. 6000 per family i.e. Rs. 8291298
Seventh 10 % pay @ Rs. 7000 per family i.e. Rs. 9673181
Eighth 10 % pay @ Rs. 8,000 per family i.e. Rs. 11055064
Ninth 10 % pay @ Rs. 10,000 per family i.e. Rs. 13818830
Tenth 10 % pay @ Rs. 25,000 per family i.e. Rs. 34547075
Then the Zakat amount payable works out to be Rs 9,81,13,693 thousand. In other words, Zakat collected and distributed in India amounts to approximately Ten Thousand Crores per annum. This does not include Fitra and general donations / grants during Ramadhan and animal skins at the time of Eid ul Adha.
It may be noted that assumptions may not look exaggerated as pattern of income distribution is highly uneven and in favour of 20 per cent upper middle class and 10 per cent top group of population. According to World Development Report 2003, the top 10 per cent population in India has a share of 33.5 per cent in the total income of the country.
Now imagine the benefits the community and the nation can get once even 10 per cent of Zakat is pooled and spent in a planned manner, keeping in view the long term goals.
LET’S HYPOTHESISE AS BELOW
1-If 10 per cent of total Zakat of Rs. 10,000 Crores i.e. Rs 1000 crores is invested for the poor which fetches an annual return of 12 % (i.e. Rs 120 Crores), it means that 50,000 Zakat receivers will leave the queue and enjoy an income of Rs. 2000 a month in addition to capital saving. Certainly a great social empowerment!
2-Alternatively, assuming labour capital ratio of 1:25,000, in home and cottage industry, 400,000 people can be helped to become self-employed with reasonably sufficient earnings to support their families every year. Assuming the generation of an employment of two more persons in each unit, the total employment generation (inclusive of owner) will be to the tune of 12,00,000 persons every year.
3-Assuming it to be community investment the generation of income will multiply depending upon the value of the multiplier. As propensity to consume among Muslims is very high, the value of multiplier is also expected to be higher. Say if value of multiplier is 10, the total income generation will be equivalent to Rs. 10,000 Crores.
4-For various reasons the image of the Muslim community is not good. People in general treat them as liability to the country rather than an asset (except of course at the time of elections). Now suppose a public welfare project like safe drinking water in cities or towns or at railway stations, any project of sanitation or health or Hydro or Wind Mill Electricity Project is undertaken and dedicated to the Nation (which houses Muslims too) the image of the community will improve, leading to positive change in behaviours and decision of millions in India. Needless to say that it will bring huge benefits to the community of social, material and psychological nature.
5-A small fraction of the Zakat fund can be used for Muallfatul Quloob (advocacy / lobbying) that will change the total socio-political climate in favour of the community in the country.
6-Appointment of 300 Counsellors / public relation officers as a pilot scheme costing Rs.7,20,00,000 p.a. (20,000 *12 * 300) will engage in disseminating and getting sanction of many government welfare schemes for the community. Few fields where each Counsellor will focus with target may be educational scholarship (200 x 5000 = Rs 10,00,000) 100 old age/ widow pensions (100 x 6000 = Rs 6,00,000), 10 marriage grants (10 x 10,000 = Rs 1,00,000), and 25 self-employment soft loans ( 25 x Rs 50, 00,00 = Rs 12,25,000). There are many more government welfare schemes which are most often unknown and funds unutilised.
Going by Cost Benefit Ratio analysis of the accounting system or by adhering to the Fiscal Principle of maximum Social Advantage, it seems to be the most important and priority work the community should engage in without any further delay. In monetary terms, organised and planned use of Zakat fund to the tune of little higher than 10% of annual Zakat i.e. Rs 7,20,00,000 can fetch monetary return to the tune of Rs 87,75,00,000/- Now see the Zakat Power for social uplift and economic empowerment. In terms of Productivity Re 1 Zakat fetches Rs 1281 (the return is 12.81 times i.e. 1281 %). Similar is the case with efficiency of work force where each one costs Rs 2,40,000/- and fetches return for the community Rs 29,25000/- (i.e. 12.18 times).
These suggestions are indicative and by no means exhaustive. However the critical look at the collection, distribution and use of Zakat leads to many apprehensions. Few of them may be noted as below:
1) Distribution of Zakat suffers from the weakness of determining genuineness of the receivers. Individuals do not and perhaps cannot have a network all over the country to find out the authenticity of Zakat collectors. Zakat collectors better equipped with the art of speaking and methods of impressing succeed in collecting more funds than others irrespective of degree of genuineness. Masakeen who are in need but do not ask for, remain almost devoid of their share.
2) The method of distributing Zakat individually has marginalised the basic objectives of Zakat. It looks as if Zakat payers pay it as Masters and not as Trustees and Recipients receive it as mercy rather than their due right in the wealth of donors.
3) Distribution of Zakat at individual level is according to the whims and fancies of Zakat payer being unmindful of the real social needs of the community / society at large. As a result of this, the social benefit of Zakat at the national level is not achieved.
4) The current practice of Zakat payment in the month of Ramadhan makes indigents richer for a couple of months and leaves them as beggars for the rest of the year. The needs of the community, which arise during the year mostly remain uncovered with Zakat fund, which may rightly be termed as social benefit fund.
- Organised collection and use of Zakat funds through religious groups, religious associations and social organisations too do not seem to conform to the letter and spirit of Ayat-e-Sadqat of the Holy Qur’ān. These collections are spent in accordance with specific agendas of the groups, associations and organisations, which may not necessarily be the priority of the community.
BETTER late than never
Thanks to general awareness world over along with other things, the need to have an agency for organised collection and planned use of Zakat became a point of debate. Convinced with fruitfulness of this exercise, efforts were made at the micro and macro levels to convert this thought into practice. Establishment of Zakat organisations at local / regional levels in India and abroad are manifestations to these efforts. As of now 10 Muslims countries namely Saudi Arabia (1951, Libya (1971), Jordan (1978), Bahrain (1979), Pakistan (1979), Sudan (1980), Malaysia (1980), Kuwait (1982), Bangladesh (1982), and Lebanon (1984) have created state Zakat authorities for collection and disbursement of Zakat fund. In countries like Saudi Arabia, Pakistan and Sudan, payment of Zakat to these state agencies is partly compulsory whereas in all other countries it is voluntary.
Objectives of Zakat teachings of Islam and need of the community, all warrant an organised collection and planned use of Zakat in India. Absence of an Islamic authority is no excuse for non-organisation. After all for every religious and non-religious need of the community we have organizations/organized groups operational under the law of the land to do the needful. Then why not for Zakat, which has immense potential for socio-economic empowerment of the community? Therefore, let us agree that it is high time for planned vigorous efforts to be made to launch a movement to address the problems related to Zakat on the one hand and educate the community to opt for centralised collection and use of Zakat at the local/state /national level on the other. The justification for such work can be understood with the help of the following lines:
1-The Holy Qur’ān at various places ordains Muslims to establish prayer and pay Zakat. This itself indicates the existence of an authority to which this amount should be paid. It is further reinforced with another verse where Muslims are characterised with practitioners of Zakat system.
2-The Qur’ānic verse specifically dealing with Zakat and its use describes expenditure on Ameleen (persons involved in collection and disbursement of Zakat) as admissible head of expenditure of Zakat. This itself denotes an organisation where there will be employees to administer the fund.
3-As per the current practice, Zakat is mainly paid in the month of Ramadhan whereas the community needs monetary help throughout the year. The fulfilment of this need is possible only when we have a Baitulmal that works throughout the year.
4-Utmost importance is attached to collective, organised and planned way of life for Muslims. For instance, when more than two, even in tours, believers are asked to select one among them as leader. Further regarding the general affairs, Muslims are asked to resolve and decide through mutual consultation.
5-Zakat is an amanat of Allah Almighty in the hands of the payers. It is required to be used in a genuine manner. As people for far of places beyond reach of payers collect Zakat, nothing can be said with certainty about its genuineness. (Concluded)
[Dr Rahmatullah is a retired professor of Business economics and Managing Trustee of All India Council of Muslim Economic Upliftment Mumbai. He has also successfully promoted INTERST FREE FINANCIAL mechanism by way of incorporating multistate Janseva Cooperative Credit Society. He can be reached at [email protected]]