Muslim Economy

The Explorer, launched into space earlier this month, has successfully transmitted scientific data back to the space center.


Mehran Mirshams, official with the space technology institute said that the Explorer transmitted the information after reaching an orbit of 200-250 km above the Earth.


Mirshams said that Iran will launch its first satellite into a 650 km orbit in June.


“The satellite would pass over Iran five or six times in 24 hours.” Iran unveiled the first Iranian-made satellite, Omid, with inauguration of its first space center earlier simultaneous with launching Explorer-1 this month.


Iran will put its own satellites into orbit to monitor natural disasters in the earthquake-prone nation and improve telecommunications.


Iran launched its first commercial satellite, Sina-1, from a Russian rocket in a joint project with Moscow in 2005.


Iran has planned to launch four more satellites by 2010 to increase the number of land and mobile telephone lines to 80 million from 22 million.


It also aims to expand its satellite capabilities to increase Internet users to 35 million from 5.5 million.

While shariah-compliant companies can ensure investment in halal and legitimate business, they have no means to ensure safeguard of the investors in the case of market crash.


* Nizam Ahmed an Information technology auditor with a multinational bank lost around Rs. seven lakh in the recent stock market crash. He was influenced by the commercial on TV channel promoting Shariah compliant stocks.


* Prof. Tarique Jagirdar last year attended a seminar on Islamic investment in Mumbai. Convinced about the Shariah compliant stocks, he invested Rs. four lakhs in these stocks. Now his shares retain only a third of their purchase value.


* Kashif Kapadia, a mechanical engineer invested his father’s, a retired school teacher, provident fund in these shariah compliant stocks and helplessly watched it melting by 40 per cent in few days.


This crash should be a lesson to all those who get carried away by the glib talks and promotions in the name of Shariah or Islamic investment. In fact the risk involved with shariah compliant stocks is as good as any other stock. Technically, investment in the shariah compliant stocks may be halal but investment in these stocks is not free from high risk and culture of greed and fear.


Today Kashif has lost his self respect. He is considering himself a culprit for taking the wrong decision in investing at a stock market and frittering his father’s hard-earned life long savings. “For 15 days I was not able to report for work as I was mentally shattered. Even today I am feeling depressed as I love my father so much. I wanted to help him but instead made him suffer losses”, he said.


In fact those who promote shariah compliant stocks, say they have nothing to lose whether Muslim investors make profit or losses, either way they will get their commission or brokerage.  From the promoters’ point of view, shariah compliant stocks are a win-win situation; but from investor’s point of view, it is risky as well as not in accordance with the spirit of Islam.


In simple terms Islamic finance differs from conventional finance in two ways. The first is the no-interest rule – you cannot earn or pay interest on loans. Second, that money is only allowed to be invested in worthy causes or in a socially responsible way.


Nizam Ahmed had an option to invest in his father’s pharmaceutical distribution business but he opted for shariah compliant stocks. In fact, his father needed the money for expansion but Nizam convinced his father to wait for six months so that he can earn maximum return on investment. “I am repenting the day when I took the decision to invest in stock market and denied my father the capital which he needed for expansion.” said Nizam.


To be plain, the stock markets promote capitalist culture. Those who have money they only have rights to raise more money, whereas Islam promotes wealth redistribution based on equity and justice. The entire stock market culture does not have any safety mechanism to protect the money of small investors. In fact the stock market should act as a wealth distribution mechanism where the role of Islamic investment should be to promote socially relevant projects which also bring in adequate return on investors money.


Umair Patel, a trader, had kept Rs. three lakhs for his daughter’s wedding slated for early next year. Influenced by the shariah-compliant investment companies, he invested it in the stock market. “Today the money is reduced to half and I am worried about my daughters,” says Umair.


Currently none of the so-called shariah compliant stocks fulfilled the important criteria that money is only allowed to be invested in worthy causes or in a socially responsible way. Let’s take for example any of the large infrastructure funds which qualify as shariah compliant stocks. These funds are utilized to create malls, residential complex for elite class only. Even when public infrastructures are created, heavy tolls are imposed which make it unaffordable for the common masses.


The stock market’s culture is based on earning huge profit. Whether stocks are shariah compliant or not, it does not matter. But common Muslims are persuaded in the name of shariah and Islam to take the route of stock market to earn money. In fact it’s an emotional blackmail. A common Muslim wants to follow Islam but he is not been made aware of the ground realities with the result that thousands of Muslim investors have suffered huge losses. 


The situation is getting scary. With slew of Islamic investments in global markets on the rise, Indian asset management companies are gearing up to get a pie of the corpus. Frontline mutual funds such as UTI AMC, SBI MF, Birla Sunlife and Kotak MF are all making a beeline to launch shariah-compliant products in the domestic market.


The reason: In India, 61 per cent of listed companies are shariah-compliant compared to 57 per cent in Malaysia and 51 per cent in Pakistan. In terms of the number of stocks, a total in excess of 450 Bombay Stock Exchange scripts, including 23 Sensex stocks, and 39 of the NSE-50 (Nifty) scripts are shariah-compliant.


While SBI MF has already introduced a Shariah compliant offshore fund under SBI Resurgent India Opportunities Fund (RIOF), Taurus has applied to the market regulator SEBI to come out with a similar product.


According to market reports, Islamic investments are on the rise in India and expected to cross the $1 billion mark by 2009. It’s simple. Muslims are huge in number. It’s very easy to persuade a Muslim to invest in the stocks in the name of shariah or Islam.


Prof. Tarique Jagirdar has learned the lesson hard way after losing around Rs. 2.5 lakh in the stock market crash. “Initially I got carried away by the promotions in the name of Islamic investments but after an in-depth study of market I realized that risks involved are huge and there are forces which manipulate market for vested interest. It’s better for an ordinary Muslim to take conscious decision after a thorough research. Do not get carried away by the promotions of the companies offering shariah-compliant products. For them it’s a pure business”, said Prof. Tarique.


(The writer can be reached at mhl@rediffmail.com)

The long pending demand of the minorities is likely to be fulfilled as the government is preparing to confer constitutional status to the National Commission for Minorities (NCM) during parliament’s budget session beginning Feb 25.


The sources in the ministry for minority affairs said that the bill granting constitutional status to the panel is being given final touches and most likely to be tabled in the forthcoming session.


Constitutional status would empower the NCM to pass verdicts binding on the organisations and agencies, while a statutory standing gives it the right to just make recommendations.


‘Unlike the national commission for SCs and STs, the NCM does not have power to investigate all matters related to the minorities nor can it inquire into any specific complaints,’


If passed by parliament, the bill would elevate the NCM from a statutory body to a constitutional one, on par with the National Commissions for the Scheduled Castes and Tribes.


The National Commission for Minorities (Repeal) Bill, 2004 and the constitution 103rd Amendment Bill, 2004 were first tabled in parliament in December 2004 with an aim to grant constitutional status to the minority panel. But the bill subsequently lapsed.


‘We believe that the bill in the new form would be tabled and passed in the forthcoming session of the parliament. It will fulfill a long demand of the minorities, says a member of the NCM adding the coming bill, hopefully, would incorporate the suggestions, which make the commission effective in more ways. The commission was transformed into a statutory body with the enactment of the National Commission for Minorities Act, 1992.