Zakat: The Economics of Ramadhan

By Syed Akbar
October 1, 2008
Ramazan is not just an occasion of fasting, vermicelli and haleem. There’s more to this Islamic holy month than personal devotion and mouth-watering dishes. The compulsory charity collected during this month either in the form of Zakat or Fitra builds the lives of innumerable people.
According to an estimate, Hyderabadis including those living abroad contribute as much as Rs 1000 crore towards compulsory charity during Ramazan. There has always been an increase of eight to 10 per cent in the Zakat collection. But since there’s no umbrella body that oversees the Zakat funds, the money thus collected goes into small charities rather than a major perceptible cause. There are several individuals who donate more than Rs 1 crore towards Zakat every Ramazan while certain Hyderabadi families are known to disburse Zakat anything upward of Rs 5 crore.
Hyderabad stands second in India after Mumbai in Zakat collection. A notable feature this year is that most of the money from Zakat will go towards welfare activities like housing, sanitation, pensions to widows and old people, unlike earlier years when the funds were primarily utilized for educational scholarships.
Thanks to the YS Rajasekhar Reddy government offering free education including professional courses for all Muslim students whose parental income is less than Rs 1 lakh a year, the organizations involved in Zakat collection and distribution have decided to concentrate more on non-educational activities. The government’s scheme has benefited the community to the extent of about Rs 200 crore. This in other words means Zakat money to this extent will go to welfare activities other than educational scholarships.
“Ramazan is in fact the month of human economics, for its benefits the have-nots. But unfortunately in India we do not have a centralized Zakat collection and distribution organization to oversee the flow of Zakat funds. There are thousands of small Zakat bodies all over the country. In Hyderabad itself there are more than 2000 such organizations. As the money is not channelised through a single source, Zakat funds are not able to provide concrete results,” said senior Islamic scholar Moulana Abdul Kareem.
Only a handful of large Zakat bodies like Hyderabad Zakat and Charitable Trust could make an impact on the poor. The Hyderabad Zakat and Charitable Trust alone disbursed about Rs 10 crore in the form of scholarship benefiting 17,000 students, including 2,300 orphans. They take up housing projects for the poor, build schools in remote areas, open hospitals and run specialized training centres for destitute and poor women.
“The concept behind Zakat and Fitra is quite simple. If fasting is made compulsory during Ramazan it is to let the person on fast know what hunger and thirst is. This brings him closer to the poor. Zakat is compulsory on the rich so that they donate a part of their income to the poor. Every Muslim must donate Zakat calculated at 2.5 per cent of his annual savings. Fitra is another form of charity. It should be paid to the poor before the Id prayers so that the have-nots too join the celebrations,” said Moulana Anwar Ahmad.