Literally, zakat means blessing, purification, increase and goodness. It is so-called as it blesses the wealth from which it is taken and protects it from misfortunes. In the Islamic philosophy, the term zakat is defined as “a pre-determined portion of the wealth taken from the wealthy persons of the Muslim society which is allocated to the poor by the Islamic law”. Zakat is considered to be one of the fundamental principles of Islam which every eligible Muslim is bound to obey. Zakat, for the eligible Muslim, is due once a year. There are some salient features of zakat system which are ;-
1.Full ownership: zakat is considered a kind of ownership as regards the receiver, the giver must purely own it. Thus, no zakat is due on property which is not fully possessed.
2.Growth of wealth:can be categorized as real growth and assumed growth.
3.Minimum wealth requirement or nisab:Zakat is due Upon a person only if he possesses the following amount of wealth: nisab for gold is 3 ounces or 100 grams; for silver it is 21 ounces or 700 grams For cash, it is an equivalent of the value of the nisab in silver or gold.
4.Exceeding the basic needs: properties which are owned to meet one’s basic requirements such as houses, work tools, machines for industry, means of transport, and furniture are excluded from zakat.
5.The lapse of a full year: a property is not counted for zakat until after the lapse of a full lunar year from the day it reaches the nisab; however, this condition does not apply to fruit and other crops.
6.Public wealth, endowments and charitable Properties: zakat is not due on public wealth since it is common property. Likewise, zakat in not due
On endowments and money dedicated to charitable purposes, such as charitable associations and funds, so long as they do not belong to a specific owner.
(Rural Development and Zakat)
Applying zakat for rural economic development can be a powerful way to uplift communities and promote sustainable growth. Here are some strategies:
Microfinance Initiatives: Establish micro-loan programs for small businesses, enabling entrepreneurs to start or expand their ventures.
Skill Development Programs: Fund vocational training and skill-building workshops to empower individuals with marketable skills, enhancing employability.
Agricultural Support: Provide zakat funds for farming equipment, seeds, and irrigation systems to boost agricultural productivity and food security.
Infrastructure Development: Invest in essential infrastructure such as roads, schools, and healthcare facilities to improve living standards and accessibility.
Cooperative Societies: Promote the formation of cooperatives for collective purchasing and marketing, helping farmers and artisans gain better market access.
Education and Health Services: Allocate funds for educational scholarships and healthcare initiatives to enhance overall community well-being.
Sustainable Practices: Encourage eco-friendly agricultural and business practices, fostering long-term sustainability and environmental stewardship.
Monitoring and Evaluation: Establish frameworks to assess the impact of zakat-funded projects, ensuring transparency and accountability.
Note :By strategically channeling zakat, rural communities can achieve economic resilience and self-sufficiency.
Practical example:-
The introduction of Zakat and Usher system in Pakistan in 1980 has also played an important role in this regard. Table 2 shows the total amount of Zakat and Usher collection from 1982 to 1991. However, poverty still remains one of the most serious problems in the country. Sohail et al. (1994) estimated the effects of Zakat and Usher on poverty alleviation in Pakistan at a disaggregated level by using the Household Income and Expenditure Survey data for 1987-88. The poverty measures reported on Table 3 are based on incomes that included Zakat. In order to seethe effect of Zakat on poverty alleviation, they subtracted amount of this Zakat from the households’ income and then re-estimated the poverty measures on the basis of the same poverty lines on which the estimates of Table 3 are based. They found that the poverty incidence has significantly increased. The similar results can be seen on Table 4 as well. It clarifies that if there is no Zakat, poverty levels are higher than those reported on Table 3.With the same view, the authors reported the percentage differences in the various poverty measures with and without Zakat on Table 5.Table 5 clearly reveals that Zakat has resulted in reducing poverty level in Pakistan by 2.41% overall from levels computed with Zakat and 3.93% in urban areas and 1.83%in the rural areas based on the head-count measure. Although the reduction of poverty due to Zakat in percentage terms seems to be small, yet the absolute number of household who benefited from Zakat is quite large. For example, more than 60 thousand households moved above the poverty line in Pakistan through Zakat in 1987-88 which is quite a large number though it is not significant in relation to the total number of poor household.
Table.2
The total amount of Zakat and Usher collection between 1982 and 1991
Year Zakat Usher Total(Rs*million)
1982-83| 855.19 |179.34 | 1034.53
1983-84| 1011.33 | 259.40| 1270.73
1984-85| 1230.86 |262.74 | 1493.60
1985-86| 1439.04 | 247.35| 1686.39
1986-87| 1513.62 | 228.92| 1742.54
1987-88| 1944.18 |240.69 | 2184.87
1988-89| 2190.01 |183.24 | 2373.25
1989-90| 2444.03 |140.79 | 2584.82
1990-91| 2685.53 |113.83 | 2799.36
Source: Central Zakat Administration, Ministry of Finance, Government of Pakistan, Islamabad (1994)
Table.3
Head Count, Poverty Gap and Poverty Measure using Poverty Lines (1987-88)
P.sub.0 |P.sub.1 P.sub.2. P.sub.3
Overall 23.2. 4.8 1.5
Urban 12.7. 2.3 0.6
Rural 27.2 5.7 1.8
Table.4
Head Count, Poverty Gap and Poverty Measure after subtracting Zakat from Households’ Income using Poverty Lines (1987-88)
| P. sub. 0| P. sub. 1 | P. sub. 2|
Overall | 23.8 | 5.0 | 1.6
Urban | 13.2. | 2.5. | 0.7
Rural | 27.7 | 5.9 | 1.9
Table.5 Percentage Change in the Head Count, Poverty Gap and Poverty Measure using Poverty Lines (1987-88) due to Zakat
P. sub. 0 P. sub. 1. P. sub. 2
Overall. 2.41. 4.93 8.62
Urban 3.93. 8.69. 16.66
Rural 1.83. 3.50. 5.55
CONCLUDING
REMARK Zakat is really a unique system in Islam in terms of I) pure transfer from the rich to poor, ii)direct incentive on the poor people, iii) no interest and no payback, iv) making down flow of money, v) reducing poverty from the society, vi) reducing social crime from the society,vii) equitable distribution of wealth, viii) individual freedom within the context of social welfare, ix) making bridge between the rich and poor, and x) universal brotherhood and justice (Sohag, 2008). Today the main task of every Muslim is to create solidarity with the poor to eradicate social injustice and poverty. People do not want to be poor. Their poverty is largely the byproduct of capitalism and oppression. And this is the reason the Holy Qur’an stresses to establish the system of Zakat in society. To introduce a reliable and efficient Zakat collection system is only one side of the coin. In fact, we need two-prolonged approaches to this issue. Firstly, the real standing issues are Unfortunately, the paying of Zakat and other forms of gifts to help the poor and needy on a voluntary basis are still widely practiced. We find no Muslim State in the world to follow all the dictates related to Zakat according to Islamic Shariah. We hope that the people of all Muslim countries would observe certain Islamic traditions in this regard. From example 1 and 2 it is clearly evident that Zakat can significantly help in poverty alleviation from the society. Its impact particularly on the poverty gap and severity of poverty index are quite significant
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