Poverty Alleviation: An Purpose Of Islamic Economics


Poverty is handled as WMD (weapon of mass destruction) of contemporary international. Eradication of it bears very significance. The commercial programs like capitalism and communism have offered selection of tools for the alleviation of the poverty from the arena. However, those excessive ideologies failed to meet the will of the folks. Non-public possession of assets, laissez-faire coverage of capitalism and sophistication warfare, dialectical materialism, state possession of assets of communism did not contact the actual explanation for poverty. This case necessitates looking for the probabilities of Islamic economics in assuaging poverty. The purpose of poverty alleviation can also be attained, in an Islamic Financial device via decreasing the inequality. It by no means approach achieving equality however fairness and justice within the source of revenue and wealth distribution. Islam removes absolutely the inequality which arises from unequal distribution of source of revenue, however relative inequality emerges from equitable distribution of source of revenue and wealth.

First a part of this newsletter has given a small advent to each standard economics and Islamic economics. Then it supplies an image of poverty of present international and Islamic standpoint of poverty. Then Islamic economics tools to relieve poverty corresponding to zakat, sadaqa, qard hasan, ganima, khums, fay, jizya, mudaraba, musharaka, prohibition of passion, abolition of extravaganza, prohibition of hypothesis and hoarding had been discussed in in brief. Affect of Islamic financial tools on marginal propensity to eat, multiplier, worth funding and manufacturing had been handled.

The books and articles I referred for this newsletter are Dr. Dr.Sabahuddin Azmi’s Islamic Economics, S. M. Hasanuzzaman’s Financial serve as of an Islamic state (The early revel in), In opposition to figuring out the commercial device of Islam written by means of Dr.P Ibrahim and Advent to the commercial device by means of Moulavi.M.V.Saleem.


No one can undermine the significance of economics which is a social science that research the manufacturing, distribution, industry and intake of products and products and services. This very significance of economics led to emergence of various financial programs on this planet and all of the ones financial programs declare that they’re going to fetch financial welfare. The ones dominating and distinguished financial device’s failure to perform financial justice, prosperity, the eradiation of the inequality and poverty make vital another financial device which will effectively make a hunger loose and poverty loose international.

Definition of Economics

Social scientists have evolved quite a lot of definitions of economics. Lionel Robinson’s shortage definition of economics is maximum authorised among them. In line with Robinson “economics is a science which research human habits as a courting between ends and scarce approach that have selection makes use of” This definition is in line with two issues which might be shortage of sources and the by no means finishing wishes. However actually former is a delusion. The survey performed by means of UNO presentations which can be sufficient sources for 20000 million other people on earth we’ve got handiest 6000 million other people on earth living now. Latter level ‘by no means finishing wishes’ could also be improper as the will and greed of the person is limitless however the want is countable and controllable.

Definition of Islamic Economics

As a device of lifestyles Islam has now not left any space of human lifestyles with out steering. If it is religious, person, social, economical or political Islam offers transparent lower tips. Through bearing in mind the commercial tips of Islamic resources, Islamic economists have evolved plethora of definitions. Derivation of each and every definition of Islamic economics is in line with steering given within the elementary resources of Islamic shariah which might be Quran and hadith.

In line with Yusuf Ibrahim, professor of Islamic economics, Qatar College “Islamic economics is a science finding out the steering of the human habits in opposition to the usage of sources to meet the wishes”. This definition is primarily based upon the next information.

1. The sources are sufficient for pleasing the wishes.

2. However the sources will have to be secure from the waste, and wrong use.

three. The human habits in opposition to the sources will have to be managed by means of divine injunctions.

four. Most effective prison wishes, wishes that construct lifestyles on this planet, will have to be happy.

five. Unlawful wishes (needs), which break lifestyles on earth, will have to now not be happy; they’re by no means finishing and not happy.

Islamic financial device, a normative financial device, has been constructed upon positive basic Islamic philosophies. In line with Quranic teachings actual and absolute possession of the wealth belongs to the writer of the similar, Almighty God. Quran says “To Allah belongs to the whole lot within the sky and on this planet” (2:284).Function of the person is regarded as as trustee who’s to regulate the agree with, i.e. wealth in step with the directives of the actual proprietor; God. Quran obviously states “And spend of that the place of hath made you trustees” (57:7). So guy has been granted

conditioned and restricted possession.

Every other Islamic philosophy is common brotherhood and equality of fellows as their writer is one and oldsters are similar. Therefore difference in line with colour, caste, creed, races don’t undergo at any value. This idea induces the folks for cooperation and participation of their all efforts as an alternative of dishonest, exploiting and making fraud each and every different. Every other side of Islamic philosophy is the religion within the Day of Judgment after dying. Within the lifestyles after dying guy is in control of his deeds on earth. The implication of this religion is that financial alternatives one makes in international are to be judged in step with the norms Allah has laid down.

Those are the progressive issues which differentiate Islamic economics from the liberal, capitalistic, imperialistic, mainstream, usurious financial device and communist, elegance warfare, state dictatorship financial device. Islam constructs a simply international at the spirit of permanent divine ideas.


Evil of any financial system is poverty. The presence of begging fingers in an financial system pulls that financial system into a long time again. Poverty midst masses is the problem confronted within the fashionable international. Have an effect on of the poverty can not confine into hunger handiest, however deficient other people, excluding hunger, struggling restricted source of revenue which results in inaccessibility of fine training it disables them for difficult careers which calls for selection of years lengthy training. Absence of nutritious meals ends up in extra kid morality amongst disadvantaged sections. Since restricted get entry to for info and data the ones are averted from marketplace and alternatives.

Each nation and world organizations like Global Business Group, Global Financial institution and Asian Construction Financial institution onerous paintings to build the international locations and international at the foots of self sufficiency respectively. Venture of the Global Financial institution is described as international poverty relief and development of dwelling requirements. Normal Council of UN has declared October 17 as World day for the eradication of poverty. It presentations how critically they took poverty as an issue

However, it’s questioning that out of 6.1 billion international inhabitants greater than 1 billion are discovering their livelihood in lower than $1 consistent with day and nearly three billion on lower than $2 consistent with day. You may well be provoked that 74% of general source of revenue of global is shared by means of the 20% of the elite elegance of the arena. It’s heartening you that there are international locations whose nationwide source of revenue is much less $800 and morality of under 5 years age kids is set 26%.It’s being concerned that 110 million number one faculty age kids are out of college and 60 p.c of them are women.


Poverty and Islamic Economics

Under Poverty Line (BPL) fixes in Islamic economics device at the foundation of possession of nisab, which prohibit makes one eligible for the cost of zakat Whosoever wealth on or over the nisab is chargeable for the cost of zakat. The ones wealth is under nisab are zakat recipients and they’re handled as deficient. Therefore, in Islamic economics, the dimensions of disadvantaged come beneath BPL will likely be massive. Hunger and inaccessibility of meals, refuge, cloths and training may now not undergo in an Islamic financial system which goals human falah, i.e. human welfare. It does now not make stronger any financial software that results in the deprivation of the person. Since poverty emerges in an financial system because of quite a lot of reasons so wiping out of those reasons is basically necessary.

Restricted source of revenue, unequal distribution of source of revenue and wealth, misdistribution of sources, regional disparities, unemployment, social injustice, and reduced investments …and so forth are one of the hindrances in the best way of attainment of self-sufficiency and welfare. Islam considers the achievement of elementary wishes of each member of society is financial, ethical in addition to non secular legal responsibility of the ruler. Record of the fundamental items extends from conventional meals, clothes and refuge to seasonal clothes, non-public attendant to disabled particular person, and expenditure on marriage of deficient and expenditure on whole circle of relatives of deficient, which might be intensified by means of students every so often and more likely to lengthen the listing time to time for the welfare of the citizen. Islamic financial device introduces a host of divinely guided tools which bring to a standstill of poverty and construct

poverty much less international.

Islamic Financial Tools to get rid of poverty

It’s urged to Muslim electorate in an Islamic county, because the a part of consider, to follow positive issues of their lifestyles, a few of them are obligatory nature and the remainder are voluntary nature. The follow of those could have huge financial implications excluding the praise of God. Non Muslim electorate even have to be sure obligatory bills, that have financial affects, because the a part of their citizenship within the Islamic nation. Obligatory tasks and agreements of electorate are ruled by means of the Islamic nation and violation of any section would now not undergo Islamic state. Along with those purposes there are different issues the Islamic state has to hold out very similar to any country does for the welfare of electorate. Each sure and unfavourable measures have advisable by means of Islam for wiping out the explanation of poverty.

Certain Measures

There are a lot of Islamic orders and injunction to accomplish positive issues that have immense affect on economies justice, prosperity and enlargement. Necessary divine injunctions among them and their affect upon the financial system are briefed under.


Zakat is the once a year legal responsibility of rich Muslims to deficient and it’s the percentage of have-nots within the assets and wealth of the wealthy. Quran commends “determine worship and pay the deficient his due (zakat) and obey the messenger”. Technically we will be able to name it as religious tax. It’s imposed on the ones types of wealth that have the capability to develop in worth or in a different way produce additional, is having the custody of entire 12 months and feature exceed a definite minimal worth referred to as ‘nisab’. Quran has said the 8 explicit heads for the distribution of zakat.

Because of the divine spirit for the efficiency of zakat, possibilities for evasion are much less. The imposition of zakat on idle wealth urges the house owners for the productive and successful employment of idle wealth which will increase the wealth of financial system and once more the percentage of zakat.


Sadaqa is the probably the most voluntary financial software. No prohibit and eligibility standards for appearing contributions to needy. It may be divert, excluding the 8 heads discussed for the distribution of zakat, to any needy. and it’s going to make stronger what financial implications emerged by means of zakat.

Qard hasan

It’s an association of passion loose loans for unproductive functions or for the needy to fulfill the bills like medical institution bills, house bills and training bills and so forth which might be are not making any profits. So it isn’t in a position to price any subject matter get advantages, like benefit percentage, from qurd hasan. Those are supplied because the a part of kindness to human beings. In an Islamic financial system people and establishments like Islamic banks will be offering this sort of loans anticipating the praise of Allah. Availability of qard hasan reduces the monetary burdens like passion, of disadvantaged.

Benefit and loss sharing

Islam formulates benefit and loss sharing because the software of industry contracts instesd of passion. The incentive in the back of it’s the cooperation among the folks. In benefit sharing there are various kinds of financing corresponding to mudaraba (benefit and loss sharing) and musharaka (participation) …and so forth

Mudaraba is the settlement between each capital proprietor and entrepreneur to percentage the benefit arises from the industry and in case of loss capital proprietor’s capital reduces and entrepreneur’s effort and time unfastened. Musharaka is the settlement to percentage benefit and loss the place all members take part in control of commercial. Each mudaraba and musharaka lend a hand the folks, who’ve inadequacy of capital, to have interaction in industry, manufacturing and give a contribution their percentage into the welfare country and earn for their very own.

Ganima (warfare booty), Khums (one 5th) and Fay

Ganima is the valuables Muslims grasp from the enemy. 4 5th of the ganima is split some of the preventing military and one 5th (khums) of all the ganima transfer to state fund, which is earmarked for the particular beneficiaries discussed in Quran. Fay is the valuables receives from the enemy with out exact preventing. This supply of state income is generalized for the average just right of all the inhabitants and public welfare.

Kharaj (Land- Tax)

Land-Tax, a income of state, is the levy imposed on land produce. That is if truth be told the hire for the usage of worth of agricultural land. The velocity of kharaj and means of assortment can also be declared by means of state every so often as there’s no path of Quran and custom of prophet on this regard.

Jizya (Ballot tax)

Jizya (poll-tax) imposed at the non-Muslim electorate of Islamic nation for securing their wealth, assets and lives from harm. It is helping them to give a contribution their ability, ability, well being, wealth and assets for the prosperity of the rustic

Waqf (Endowment)

Waqf (endowment) is common income which is earmarked and devoted fund of Muslim for supporting charitable and welfare actions

State possession on uncultivated land:

Any financial software that hinders productiveness is damaging to economies filthy rich. In line with Islamic shariah, if a land is remained uncultivated 3 consecutive years result in shifting of possession of that land from present proprietor to different who’s able for domesticate the land and convey. Prophet (pbuh) mentioned “The unique rights of possession in land are God’s and the prophets after which yours afterwards. However he who revives any lifeless land acquires the suitable of possession to it”. There’s an some other establishment, iqta, spice up the flow and tax income of the state by means of moving the uncultivated/lifeless land to anyone in go back for ushr or khraj.

Mixed possession of herbal sources:

Person possession of herbal sources like hearth, water, pasture and salt are limited by means of the Islamic shariah. Other people have mixed possession in those herbal sources which will have to be out there to any person. This rule permit any person to make use of the convenience derives from the herbal items and make certain that no one is clear of the herbal items which might be simple to get to with none onerous paintings.. Record of herbal items, along with discussed items, can also be prolonged into extra items in time to time. Prophet (pbuh) mentioned “persons are joint house owners in water, pasture and hearth”.

There are different resources of revenues like assets of deceased without a prison inheritor, misplaced and located without a claimants and further taxations.

Unfavourable Measures

There are some prohibitions of God which has affect at the economies prosperity and welfare of each males of nation.

Prohibition of passion

Passion, no matter shape, has been contemned by means of Allah and His messenger. Quran says “Allah has accepted industry and hath prohibited riba” (passion). Islam does not make stronger passion however benefit and loss sharing. Each monetary transactions of Islamic financial system will have to be freed from Passion. However absence of passion in an Islamic financial system does not create any hindrance to prosperity however flourish the prosperity.

Prohibition of speculative tools

Tools which do not need any benefit to actual financial system corresponding to futures and choice aren’t accepted in Islamic financial system. Inventory marketplace tools like day buying and selling, marginal buying and selling are prohibited, both. Absence of those tools within the financial system reduces hypothesis which is hurt to all the financial system.


The implementation of shariah tips we mentioned above in an financial system result in selection of sure culmination which make the state loose from each type of poverty.

Larger redistribution of source of revenue and wealth will lead to, when the folks carry out the non secular responsibilities like zakat, donation, waqf, inheritances, fithr zakat and kaffarath and so forth… It results in drift of wealth and cash from wealthy to deficient. Thus the focus and accumulation of wealth in a couple of fingers come down. Deficient and needy spend roughly 80 p.c in their profits to meet their elementary wishes. Economically Marginal Propensity to Devour (MPC) of the deficient is greater than center and top elegance. A big portion of no matter comes into to hand of deficient will drift to financial system for intake of elementary items; it result in extra call for for number one items after which it consequence within the higher manufacturing of elementary items. It’s tough to limit sumptuous intake and manufacturing utterly by means of legislation and drive. However the higher price of redistribution of wealth and source of revenue build up the call for for elementary items and reduce the call for for sumptuous items. Robotically it reduces the usage of sources for the manufacturing of luxuries. Because of this, herbal sources use for the manufacturing of elementary items and for the good thing about public welfare

This higher redistribution of wealth to deficient permits them to get the accessibility of fine training and nutritious meals. Larger wisdom and abilities lend a hand the deficient to get just right jobs and earn. This raises all the deficient circle of relatives and dependence to heights. In flip, build up of source of revenue greater than a definite prohibit lead them to succesful for appearing zakat and different voluntary donations for the sake of the good thing about have-nots. Upward push within the redistribution lend a hand to scale back the distance between haves and have-nots and convey financial justice to all electorate.

Larger MPC of deficient because the redistribution of source of revenue ends up in extra multiplier impact in financial system that fuels extra source of revenue to the entire source of revenue of financial system that lend a hand the deficient segment of other people to boost their consistent with capita source of revenue and dwelling requirements.

In line with Professor Keynes, funding depends upon two variables which might be present uncommon of passion and the marginal potency of capital or anticipated benefit price. Funding would happen provided that the anticipated price of benefit exceeds of passion. Because of the absence of passion, in an Islamic financial system, handiest the dimensions of anticipated price of benefit of benefit would be the determinant of funding.

Speculative cause of cash and liquidity idea of cash will haven’t any position in an passion loose financial system which reduces funding. However the presence of handiest anticipated price of benefit will lead to investments, even in low price of anticipated price of benefit to extend their concept quantity and to keep away from the deterioration of predominant via zakat. The higher funding raises the manufacturing, employment, wages and general nationwide source of revenue of financial system. It flows wealth to deficient and raises their financial standing.

Fisher’s amount idea which states that amount of cash impacts the fee and price of cash. It signifies that build up within the provide of cash will proportionately build up the fee in financial system however the output won’t build up. However when it comes to Islamic financial system cash will have to now not be equipped with out making build up within the output. The central financial institution and industrial banks of Islamic state build up the cash provide via making funding contracts at the foundation of benefit and loss sharing. So each drift of cash into financial system ends up in output enlargement with out making proportionate hike in worth. It’s useful to the deficient to get want issues at affordable worth


Method of getting rid of poverty in Islamic financial system is discreet. Religion within the oneness of God (tawheed) motivates to the efficiency of zakat and benefit and loss sharing and warding off passion and extravaganza. Larger redistribution and productiveness are the result of those tools which is helping in spite of everything to score alleviation of poverty.

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