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Islamic Voice Logo
MONTHLY    *    Vol 11-05 No:124     *   May 1997/ MUHARRAM 1419H

email: editor@islamicvoice.com

ISLAMIC ECONOMICS


Economic System in Quran and Indian Muslims
Islamic Fiqh Academy (India( on Equity Shares


Economic System in Quran and Indian Muslims

M.Naushad Ansari

The Quran imposes upon its followers a universal obligation to serve humanity. Muslims have been asked in the Holy Quran to strive continuously to establish the Nizam-e-Rabuhiyath, the system of sustenance which guarantees peace, growth and development of the entire mankind.

Wealth and Quran

According to the economic concept of the Quran, wealth cannot be accumulated, stored and kept idle. Such accumulation is most undesirable. (Holy Quran,59:7). Islam teaches that everyone should take for his or her earning only that much required to fulfil his or her needs, and the remaining part will be left to meet the requirement of other needy persons (Holy Quran,2:219). Such persons whose basic requirements are not fulfilled have a rightful share in the surplus of other members of the society.( Holy Quran,51:19,70:24). Under Quranic system no one will have surplus money or asset, therefore, the question of owning property, over and above one’s real need, doesn’t arise. The Holy Quran warns the hoarders: “And there are those who bury gold and silver and spend it not in the way of Allah: announce unto them a most grievous penalty on the day when heat will be produced out of that (wealth) in the fire of Hell, and with it will be branded their foreheads, their flonks and their backs” (9:34-35).

It is reported that Prophet (Pbuh) said: “untill four questions have been asked, no one will be allowed to move on the Day of Resurrection. Two of these are: How did you earn and how did you spend? Sovereignty of the property rests in Allah and mankind is only its custodian”.

Helping Poor: In a very clear term the Holy Quran declares “ provision must be made to help the kindred, or orphans, way- farers, widows, who are in bondage or in debt, those who are expelled from their homes and deprived of their property, and, in general, needy” (Holy Quran, 59:7-8). There is definite guarantee that those who pay poor due i.e, Zakat are bound to prosper. It is stated in the Holy Quran that “ Those who establish regular prayer and pay regular poor-due they are the ones who will prosper”. (Quran,31:4-5).

But unfortunately very few among rich Muslims pay the minimum rate of Zakah i.e 2.5% annually. Since in India there is no proper agency to collect it purposefully, its benefits are never seen and felt. Hardly any Muslim, in addition to Zakah, pay Sadaqath for which there is no maximum limit. As it is stated before, everything which is surplus must be spent.

At this time when the Muslim community is suffering from rampant poverty, merely by paying a minimum rate of Zakah a rich Muslim cannot absolve himself of his duties towards the society. The spirit of prayer, fast and Hajj etc lose their credibility in the absence of this duty.

When during the governance of the Caliph Abu Bakr (R.A) some people refused to pay the poor due, he declared Jihad (holy war) against those defaulters. Even though they performed prayers and professed faith in Islam, those rich Muslims were called trecherous.

Interest Vs Zakah

Interest is opposite to Zakah. In an interest-based society, the poor need to pay their hard earned money to the rich. Whereas, in the Islamic Society, the rich need to channelise their money to the poor by means of Zakah and Sadaqath. But it is a matter of grief that a good number of rich Muslims earn interest from their deposits in Banks, Moulana Moududi warns Muslims in his book “let us be Muslims” in these terms.

“ By adopting the evil system of interest instead of Zakah they (Jews) have invoked Allah’s curse. We, too, have neglected Zakah. We overlook our duty to use our power in spreading good and eliminating evil. And the consequences have been no different. We have become victims of tyrants. We are weak and live in servitude wherever we are found.”

Mr. Abdul-Hamid Ahmed Abu-Suleyman in his book” The Islamic Economic Theory” has gone to the extent of declaring that Riba (which is said to be Haram in the Holy Quran) is not simply a matter of loan interest or bank interest. It is a comprehensive concept which includes aspects related to capital, land, general circumstances and use of laws of nature. In all these aspects, whenever man claims a private income greater than his equal share of natural power invested in these resources, he is really claiming rubbubiyyah and committing usury”. Prophet (Pbuh) said.

“ He who has land should cultivate it. If he will not or cannot, he should give it free to a (poor) brother and not rent it to him”. (Al-Bukahri)

Strictly speaking even share cropping is prohibited in Islam. The crop is solely the property of the person who farms it.

Unfortunately these facts have been forgotten by the Indian Muslims. They have made Islamic principles limited to rituals. Islam stands not only for a glorious hereafter. It stands for the uplift of the poor, the preservation of the weak and the prevalence of the spirit of the brotherhood of mankind and to transfer this planet into one large home.

Umrah fashion

One time Haj is incumbent on every affluent Muslim who can afford it. Additional Umrah’s and Hajj are optional. Indeed in certain circumstances other society related duties become dearer to Allah than optional Umrah’ss and Hajj. In India when more than 70% of Muslims live below poverty line, more than 50% of Muslims are un-educated, a majority of Muslim students face drop-outs due to poverty, Islamic scholars must ponder over whether the said optionals are meaningful or not? In Muslim populated, areas we find a greater number of travel agents conducting Umrah’s than good schools and madrasas.

Recently in some section of press we heard about a 12-crore Masjid at Surat. Besides there are a good number of Mosques in Tamil Nadu, Maharastra, Andhra Pradesh etc where in many mosques more than crore of rupees have been spent in construction. Those are marble-floored air-conditioned, well-carpeted and extensively decorated. The attendance in five times prayer in these Mosques harldy cross two digits. Only in Ramadhan month the attendance is higher and in Friday congregational prayers the Mosques are full, that means the mosques are fully utilised only for half-an-hour a week and for two hours a month. Are we not spending money in the construction of Mosques, disproportionate to their utilisation? Can’t we make temporary arrangements during Ramadhan and Friday Prayer?

Islam disapproves of pomp and show, materialism, show-off, splendour and vanity. As reported in Ahadith, Prophet(Pbuh) advised us to build simple Mosques and disliked decorations. There are hundreds of Mosques in remote localities which do not even have roof, water for wazoo. Many are in huts. It is not necessary for the well-funded Mosques Management to divert the fund, if not for eradication of illiteracy, poverty, ill-health etc, at least for financing those poor Mosques?

Wakf Property

Properties Muslims migrated to Pakistan after partition was declared, but they left their sizeable land property in India as wakf properties. Had those been maintained properly, the poverty from Muslim Society could have been erased. But it is said that those Wakf properties have not been looted by the Government agencies alone but also by the Muslims. Many have been sold-out, many have been encroached upon, many have been mortgaged. Many Wakf properties are still being looted. Most of the properties are at prime localities, but still the board shows losses. The collection of offerings at Dargahs go in crores annually, but never declared or utilised for the betterment of society. There is the curse of Allah on those trustees.

People do not perish for lack of wealth but for lack of vision, and vision is a rare commodity among Muslims. It is high time that Muslim leaders, intellectuals, scholars and elite group looked beyond, to be successful in a real sense and Islam has the depth to show the way for this.
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Islamic Fiqh Academy (India( on Equity Shares

Islamic Fiqh Academy in its Ninth annual session held at Jaipur during Oct. 11-14, 1996 resolved that:
1. Equity share of a company represents the ownership of the share holder in the company. It is not a proof of a loan to the company.
2. The primary purchase of the shares of those companies which are still in the process of capital raising is not purchase from Shariah point of view. Rather it is a partnership in the company.
3. Generally the non cash assets of the companies are greater than cash, therefore, the purchase of companies’ share is permissible. How ever, if it is confirmed that the cash paid for (purchase of ) the shares is equal to or less than the cash represented by the shares, then in this case the purchase of the share at more or less than their real price shall not be valid.
4. The sale and purchase of shares of companies engaged in business of wine or pork or interest based holding is not permissible.
5. The participants of the seminar feel that it is feasible to establish in India, companies that may operate on pure Islamic principles. It is for Muslim businessmen and Islamic economists to discharge their responsibilities by establishing such companies. Since, companies operating on pure Islamic principles are at present not existing in India, the Muslims, who have cash capital but unable to invest in halal business, can purchase shares of companies whose primary business is halal (e.g. producing engineering or consumer goods) even they are involved in certain interest-based transactions due to legal hindrances.
6. Muslims who have purchased shares of such companies whose primary business is halal, but partly they are involved in interest based transactions if have a responsibility to persuade the company in its annual meetings to refrain from those prohibited transactions. They should also convince the other share holders to win their support in the meeting.
7. If in the dividend of the company, the interest earning is also mixed and its amount is known, then the share holder must give away this amount in charity with out an intention of reward (Sawab).
8. If interest earning is a part of the company’s profit and this interest income has been used to earn further profits, then the profit proportionate to the amount of interest must be parted out of one’s income without intention of reward (Sawab).
9. A company has its own legal entity which represents the collective position of the share holders. The Board of Directors is a group elected by the shareholders of the company. The Board acts on behalf of the company as the representative of share holders. Thus the shareholder will be indirectly responsible for any act of the Board of Directors, done within the prescribed rules and regulation of the company.
10. Trading in shares of companies having halal business is valid and permissible.
11. The future sale is not permissible as it is a clear game of chance. Its purpose is to settle loss and profit with increasing or decreasing prices of shares rather than buying the shares.
12. Forward sale in which the contract of purchase is entered in future, is simply a promise of buying and not a real purchase. So the purchase will be realized only after fresh offer and acceptance (Ijab wa Qubul) at the due date.
13. In cash/spot sale it is not permissible to sell the purchased shares before getting possession of share certificates.
14. After receiving the share certificates, the possession is completed even though the name is not transferred yet due to administrative difficulties. So the buyer may sell it now.
15. Dealing in the shares as broker is permissible provided that sale and purchase of those shares is valid. It is not permitted to work as broker in sale and purchase of shares of companies engaged in haram and invalid business.
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