The International Seminar on ‘Islamic Economics and the Economy of Indian Muslims’ was organized during July 21-24, 1989 by the Institute of Objective Studies (IOS) at Hamdard Convention Centre, New Delhi.

The Programme of the Seminar included nine Business Sessions; three special sessions and one Public Lecture. In all, 33 papers were presented. 

Friday — 21 July 1989

The Seminar was inaugurated by Hon’ble Dr. A. R. Kidwai, former Governor of Bihar and Chancellor of Aligarh Muslim University, Aligarh, on Friday, July 21, 1989. The Inaugural Session was presided over by Dr. S.Z. Qasim, pioneer oceanographer of India and Vice-Chancellor of Jamia Millia Islamia, New Delhi. The keynote address was delivered by Dr. F.R. Faridi, a renowned Islamic Economist.

The proceedings of the inaugural session began with the recitation of some verses from the Holy Quran. Mr. A.R. Agwan, Seminar Organiser and Director of the IOS welcomed the delegates. Later on, Dr. Mohammad Manzoor Alam, Chairman of the IOS gave an introduction to the Institute and shed light on its objectives and achievements. Commenting on the problems of Muslims of India, Dr.Alam cited the problems of social dependence, economic frustration, social depression and educational backwardness of this community.  Dr. Alam described some basic features of Islam such as peace, purity and obedience to Allah's Will. He asserted that Islam is a message of peace and Muslims held the foremost responsibility of communicating its message to non-Muslims.

In his inaugural address, Hon'ble Dr. A.R. Kidwai endorsed the view that Islam provides all essential ingredients and principles to solve the existing problems of mankind. He also elaborated that the teachings of Islam are valid for all times to come. Dr. Kidwai emphasized the need to examine the principles of equality and other such Islamic principles to ameliorate the problems of the 'Third World' which is suffering from poverty, debt and exploitation due to West's economic imperialism.

In his keynote address, Dr. F.R. Faridi said that Islamic Economics is an emergent system of thought which claims to offer an alternative way to tackle problems of socio-economic reconstruction. Its efficacy and successful actualisation is a recorded history. Giving example of Zakah, he stressed that expenditures on poor and deprived constitute first and foremost element of Islamic Economic theory as Zakah is not a voluntary act of charity rather it is an obligatory minimum due towards the poor. He also highlighted the Islamic value set, especially justice, equality and brotherhood. In the context of the economic problems of Muslim Minority, Dr. Faridi expressed the hope that the Seminar would focus on the internal dynamics of the Muslim community.

The Inaugural Session came to an end with the concluding remarks made by Dr. S.Z. Qasim, Chairman of the Session. In his address, Dr. Qasim expressed his complete agreement with Dr. A.R. Kidwai on his assertion that principles of Islamic Economics tend to restore the economic order in the world. He argued that in the context of unprecedented global economic disorderliness, indebtedness and exploitation of poor -nations, the Islamic concepts of Jaza and Saza and banning of interest were worth mentioning.

The Inaugural Session was followed by two Business Sessions in the evening. The topic of the first session was "Employment Situation of Indian: Muslims: An Appraisal of its Nature and Magnitude" and was chaired by Prof. M.A. Muttalib. Prof T. Abdur Rehman was' Rapporteur. In all, four papers enlisted as under, were presented:

1. An Analysis of Employment Situation of Indian Muslims by Dr. K.G. Munishi.

2. Economic Problems of Indian  Muslims and their Islamic Solutions by Mr. Syed Thanvir Ahmad.

3. Employment Situation of Indian Muslims by Ms.  Nazhat Jabeen.

4. A Socio-Economic Survey of Muslim Women Labour in Bidi Industry: A Case Study of N. B.

Dargah area in Madras, jointly authored by Ms. Raihana and Ms. Asiya, presented by Ms. Asiya.

Dr. K.G. Munshi, Using an econometric model, established a relationship between (discrimination and nature of skill. He suggested that Muslim voluntary organisations individually and collectively should come forward to promote skill formation among the Muslims.

Mr. Syed Thanvir Ahmad emphasized that higher degree of backwardness, unequal distribution of wealth and poverty in the Muslim community required efforts for mobilisation of internal and external resources for productive purposes through God fearing members of Muslim community. Imparting religious knowledge to Muslim masses is also necessary.

Ms. Nazhat Jabeen focused on the illiteracy, poverty, developing stage of the national economy to analyse the inadequacy of employment of Indian Muslims. She emphasised the need of education, technical training and mobilisation of resources through establishing interest-free economic institutions.

Ms. Raihana and Ms. Asiya established that illiteracy, family size, non-availability of jobs in other sectors were the principal reasons for the low level of earning and also for exploitation of Muslim women bidi workers of Madras by bidi contractors. The authors suggested that education and training should be provided to these bidi workers in other more profitable trades.

The deliberations of the second session were themed on "Islamic Banking: Theory and Practice" It was chaired by Dr. Shawki Ismail Shehata, Financial Advisor to the Faisal Islamic Bank of Egypt, Cairo, Dr. Tahir :Beg was Rapporteur.

In this session three papers were presented. The first paper entitled "Islamic Banking: Some Unsettled Issues" was presented by Mr. T.R. Bishnoi. Second paper entitled "Banking and Financial Framework in the Islamic Economic System" was presented by Dr. J.I. Laliwala.

The third paper entitled "Islamic Interest-free Banking: A Study of its Comparability and Relevance in a Secular Economy" authored by Dr. Khorshid Alam could not be presented in the seminar due to his indisposition.

The last paper of this Session, entitled "Interest-free Banking and, Conventional Banking in the Light of Secular Economic Theory and Policies", was presented by Prof. M.I. Bagsiraj.

Mr. Bishnoi felt that Islamic Banks are exposed to instability, less profitability, and uncertainty in a country like India. Moreover, monetary policy is likely to be impaired by introduction of Islamic Banking in India. Dr. A. Haseeb and Dr. F.R. Faridi counter-argued the tentative conclusions of Mr. Bishnoi.

Dr. Haseeb explained that fluctuations in GDP are generated by the interaction of Multiplier and Acceleration. The Multiplier-Accelerator interaction, under Islamic banking system is likely to generate smooth; and steady growth of GDP. Dr. Faridi's contention was that increasing use of fiscal measures was a pointer to the fact that interest-free system was a far more effective regulator of the economy.

Dr. Laliwala highlighted the inflation prone nature of interest-based economic system. He focused on the issue of inflation and on its causes in the interest-based economy. Dr. Laliwala asserted that deficit financing is the major cause of inflation. In modern economics the deficit financing is carried out by interest based monetary policy^ Therefore, interest is to be blamed for the major economic ills. He contended that deficit financing is against the spirit of Islam.

Prof. Bagsiraj critisized the conventional economic theory on the ground that it considers capital as an original factor of production. According to him the capital itself is a produce of other factors of production. Therefore, Islamic standpoint on distribution of Income is logical natural and just.

Saturday —July 22, 1989

The deliberation on the second day of the Seminar included three business sessions and a Public Lecture.

The topic of the first session of the day was "Islamic Approach to Economic Development/Is Islamic Economics Relevant to Indian Situation". It was chaired by Dr. J.I. Laliwala. The first paper entitled "Public Economics of Islamic Egalitarianism" was presented by Prof. K.K. Upadhayaya.

The second paper entitled "Private Property and Social Justice in Islamic Economic System" was presented by Mr. Khwaja Naseeruddin. The third paper entitled. "The Idea of Merit Effect: Islam's Contribution to Economics" was presented by Dr. Syed Afzal Peerzada.

Prof. Upadhayaya asserted that if economic policy of a country is made to be governed by the Islamic principles of equality, rule of law (justice) redistribution of income and wealth, free enterprise with easy supply 16 cheap capital for all, thus, would imply equality of opportunity to earn and to produce and consume. This would result in happiness for all and remarkable advancement of the economy.

Mr. Naseeruddin gave an exposure to the Islamic concept of ownership. He asserted that the right of free enterprise under the concept of trusteeship differentiates Islam from both Capitalism and Socialism. Islam establishes a complementary relationship between rich and poor by making Zakah a religious obligation on the part of rich (Sahib-e-Nisab'). Dr. Peerzada in his paper provided a diagrammatic exposure to the effect of Zakah on work-efforts and asset-building. He pleaded that imposition of Zakah tends to raise the level of economic well-being of the society and also stimulates personal urge for even harder work-effort resulting in further growth of the economy.

The second session of the day had the theme as "Muslim Participation in Industrial and/or Agricultural Sectors in India/Muslim Awqaf" and was chaired by Dr. Abdul Qader J. Shiekh. Five papers were enlisted for this session.

The first paper had the title "On Culturogenic Poverty: Observations from a Muslim Village in West Bengal" and was presented by Prof. Shiekh Rahim Mondal. Prof. Mondal made the case that poverty in the village of Chakanekhar studied by him was due to low level of income coupled by unwanted spendings on rituals and social customs.

The second paper entitled "Pathology of Urban Poverty: A Study of Muslim Settlement of Hyderabad City" was presented by Dr. M.A. Muttalib. Dr. Muttalib told that his study has revealed an increase in the literacy rate, yet the drop-out rate was even higher.

.The third paper "Muslim Awqaf in India: Surveys Problems and Potentialities" was authored by Mr. S. Khwaja Hussain. The paper was read by Dr. Moneer Alam. The author highlighted the mismanagement and self-centered attitude of Mutawallies and pointed out that State Legislation often tended to be anti-Awqaf.

The fourth paper entitled "Problems of Waqfs and Mutawallies in Tamil Nadu" was authored by Prof. K.M. Pathusha. And the fifth paper had its title as "Place of Waqf in the Economic and Social Policy of a Muslim State" was authored by Dr. Ibrahim E. Kozake.

The third session of the day was devoted to the theme "An Islamic Critique of Conventional Economics / Islamic System". The session was chaired by Dr. Izhar Malik. Dr. Abdul Azim Islahi was the Rapporteur. Three papers were enlisted in this session. Prof. S. Iqbal Mahdi presented "A Macro-economic Model of an Economy with Islamic Banking". Applying the Islamic model of macro-economic management, Dr. Mahdi discussed the role of profit ratio as a regulator of the monetary policy and a tool of stabilization policy.

Dr. Mohammad Muzzammil presented his paper entitled "Smithian Concept of Economic Behaviour and Islam". Dr. Muzzammil asserted that Economics of Adam Smith which is built upon real factors and certain motives, is much close to Islamic economics.

The third paper: entitled "The Role of Government for a Distribution Oriented Public Expenditure Pattern in Muslim Countries" was authored by Prof. AtaulHaq.

In the evening, a Public Lecture was organised on "The Salient Features of Islamic Economics". The session was chaired by Dr. F. R. Faridi. Prof. S. Iqbal Mahdi delivered the lecture. Prof. Mahdi discussed the value set underlying Islamic economics and pointed out that Zakah arid prohibition of Riba are the foremost features of Islamic economic system. Dr. F.R. Faridi in his concluding remarks pointed out to the failures of conventional economics in ensuring justice and welfare to the masses of humanity. He asserted that Islamic economics offers the best possible way to attain growth with social justice.

Sunday — 23 July 1989

The deliberation' of the third day started with the morning session themed; on "Muslim Participation in the Industrial and/or Agricultural Sectors in India". The session was chaired by Prof. A.M. Khusro. Four papers were enlisted in this session.

Dr. Abdul Qader J. Sheikh, Industry Economist and Senior Policy Advisor in the U.S. Department of Commerce presented his paper entitled "The Feasibility of Applying the U.S. Minority Business Development Model to Stimulate Entrepreneurship among Indian Muslims". Dr. Sheikh outlined the institutional set-up created by the United States Government to carry on Minority Business Development Programmes. These programmes consist of Management and Technical Assistance, Procurement Assistance by Government and Private Sectors, Promotion of Minority owned Banks and Investment Companies, and Helping Minorities acquire other Companies.

Dr. Tahir Beg presented his paper entitled "Promotion of Muslim Entrepreneurship under State Support: With Special Reference to the Role of U.P. Minority Financial and Development Corporation". Dr. Beg expressed his view that U.P. Minority Corporation is lacking statutory status, financial character and has extremely meagre resources on its disposal. It has not designed any meaningful programme of development of Minorities' enterprise.

According to Dr, Beg the U.P. Minority Corporation should be reoriented and strengthened.

Mrs. Nighat Ahmed presented her paper "The Islamic Development Bank: Hope for the Muslim World". She gave an account of the development schemes sponsored by the Islamic Development Bank (IDB) in various member and non-member countries including India.

The second session on Sunday had the topic "Islamic Approach to Economic Development/Is Islamic Economics Relevant to Indian Situation". The session was chaired by Prof. K.K. Upadhayaya. Dr. Tahir Beg was Rapporteur.

Dr. Fazlur Rahmarv Faridi presented paper entitled "Some Islamic Insights on the Theory of Consumer Behaviour" authored by Dr. Ali Elgari, Deputy Director and Professor at Centre for Research in Islamic Economics at King Abdul Aziz University, Jeddah. The author explained as to how the maximisation of utility of an individual consumer is forged with the maximisation of welfare of the society in the theory: of Consumer Behaviour under Islamic Economics.

Dr. Sayyid FayyaZ Ahmad presented his paper on "Ethical Responsibility of Business:; Islamic Principles and Implications". Dr. Fayyaz explained that ethical behaviour is necessarily an integral part of socio-economic system of Islam.

Dr. Abdul Azim Islahi presented his paper entitled "Shah Wali Ullah Dehlavi's Concept of Irtifaqat (Stages of Socio-economic Development". According to Dr. Islahi, Shah Wali-ullah divides the socio-economic development of human society into four stages of growth.

The last paper entitled "Contribution of Shah Wali-Ullah Muhaddis Dehlavi to Hujjat-Ullah-el-Baligha" was presented by Mr. Shaukat Ali Khan. Mr. Khan gave exposure to the ideas of Shah Wali-Ullah on matters such as private ownership, fiscal and financial measures which constitute Islamic economic system.

In the third session1 of the day, the topic of the deliberation was "Islamic Banking: Theory and Practice". The session was chaired by Dr. Zubair Hasan. Four papers were enlisted for this session.

The first paper entitled "Interest-free Banking: Conceptual Framework and Implementation in Pakistan" was presented by Mr. Navneet Mai Purohit. Mr. Purohit dealt with some practical problems faced by Islamic Banking sector in Pakistan, viz. indexation, prior assurance of return on time deposit and a low proportion of Musharakah and Mudarabah investment.

Dr. Shawki Ismail Shehata presented his paper entitled "Islamic Concepts and, Principles as Practised in Islamic Bank: An Analytical Study". Dr. Shehata explained Islamic concept of Money Loan, Credit Money and Islamic Bank etc. He threw light on the operational details of an Islamic bank with regard to Liquidity, Profitability and Developmental Undertakings.

Prof. T. Abdur Rehman presented his paper on "The Impediments in the Implementation of Interest-free Financial Institutions in India" Prof. Rehman was of the view that social, cultural, economic and religious conditions in India are different from those in other Muslim countries. Hence, here in India, Musharakah and Mudarabah investment institutions should be established first.

The next paper entitled "Islamic Banking in Malaysia: Performance and Lessons" was authored by Dr. Mohammad Ariff, Professor of Analytical Economics, University of Malaya, Kuala Lumpur, Malaysia. The author asserted in the paper that Malaysian experience has established the viability of Islamic banking. In his opinion, foreign Islamic banks should also be allowed to operate in Malaysia, so that a healthy competitive environment may emerge in monopolised Islamic banking sector.

There was a special session on "Islamic Economic Activities in India". The session was chaired by Dr. K.G. Munshi. Dr. Tahir Beg was Rapporteur.

The discussion was initiated by Mr. M.H. Khatkhatay and enriched by Mr. Maqbool A. Siraj, Mr. Asrar Ahmad, Mr. Phiroz Poonawala, Prof. T. Abdur Rehman, Dr. Rehmatullah and Qazi Izharul Haq.

The speakers highlighted the economic, financial and developmental activities of the organisations with which they are associated. It was reported that Bait-un-Nasr Urban Cooperative Credit Society, Bombay, and its sister concerns were operating under high cost conditions resulting in constantly higher service charges. The schemes of Al-Amin Islamic Financial Corporation, Bangalore, for de-indebtization of Muslim auto-rickshaw drivers have been found highly commendable. Similar performance has been shown by Mudarabah Fund of Madras. The All India Council of Muslim Economic Upliftment (AICMEU), Bombay, has initiated a comprehensive programme of upliftment of Muslim Minority through its schemes of vocational and technical training mobilisation of interest-free finance, Zakah Fund and Information and Guidance Services etc. The Muslim Fund Najibabad, was reported to have been facing legal and managerial constraints.

Monday — 24 July 1989

The Morning Session of the last day of the Seminar was devoted to Panel Discussion On "Economic Problems of Muslim Minority in India". Dr. A. Haseeb, Director General, Urban Banking Development Institute, Bombay, was the Chairman. Dr. Moneer Alam was Rapporteur.

The participants of the discussion included Prof. A.M. Khusro, Prof. D.B. Gupta, National Institute of Public Finance and Policy, Dr. A.Q.J. Sheikh Adviser, Department of Commerce, Government of Untied States, Dr. Iqbal Mahdi, Professor, Benedict College, South Carolina, U.S.A., Dr. K.G. Munshi, Professor, University of Gujarat, Ahmedabad, Dr. Rehmatullah, Secretary General AICMEU, Bombay, Mr. M.H. Khatkhatay, Chairman, Bait-un-Nasr Group, Bombay and Dr. Mohammad Muzzammil, Department of Economics, Lucknow University, Lucknow.

The following important observations emerged during the discussions:

1. Incidence of unemployment among Muslims is higher than the national average;

2. Share of Muslims in Central Services, Industrial Ventures and other kind of economic activities is deplorably low;

3. For poverty-ridden Muslim Minority, beating the high cost of Education has become increasingly  

     difficult;

4. Business and manufacturing activities of Muslim Minority have not diversified and expanded;

5. Rate of saving, investment and technological innovation is weak among the Muslim Minority;

6. Discrimination against Muslims is keeping them away from equal participation in the national economic mainstream.

They continued to discuss about the solutions of problems. Dr. Munshi suggested to improve the management of Muslim-run educational institutions. Dr. Gupta emphasised the improvement in work efficiency and recommended that reservations for Muslims in education and services and better credit facilities to Muslim entrepreneurs should be provided. Dr. Rehmatullah advised to incorporate a Milli Development Fund to correct savings and. investment pattern of Muslim Minority. Dr. Shiekh suggested to invest in bright Muslim students to ensure excellence. He also recommended to form a federation of Muslim businessmen and social scientists for providing management and technical training to Muslim entrepreneurs. Dr. Iqbal Mahdi suggested to create a missionary zeal among Muslims so as to enhance voluntary efforts. Dr. Khatkhatay pointed out the need of coordination among Muslim organisations and intellectuals.

Next was the special session on thrashing out of the Economic Problems of Muslim Minority in India, chaired by Prof. A.M. Khusro. Dr. Tufail Ahmad was Rapporteur.

A lively discussion took place on this issue. Prof. A.M. Khusro advised to draw benefits from Government Schemes of rural and urban development to incorporate Waqf Development Councils in all the States and establishment of a link organisation to fill the information gap in respect of opportunities.

The deliberations of the Seminar came to an end with the proceedings of the Plenary Session.

This session was chaired by Mr. Mohd. Manzoor Ahmad, Administrator, Punjab & Haryana Waqf Board. The Valedictory address was delivered by Dr. J.I. Laliwala. The resolution was proposed by Mr. T. Abdur Rehman. The organizer of the Seminar Mr. A.R. Agwan thanked the participants for their efforts in making the seminar a success. The house-was enlightened by the valuable remarks of the Chairman Mr. Mohd. Manzoor Ahmad and the Convenor Dr. F. R. Faridi. The session and the seminar concluded with the vote of thanks by Prof. Sangha Sena Singh. Vice-Chairman, IOS. A thirteen point resolution was passed by the house. The recommendations of the Seminar are as follows:

1. Resolved that the present incentive schemes of fiscal nature should be availed by Muslims. For this purpose, information and training to comply with procedural requirements should be given.

2. Resolved that voluntary organisations of Muslims should identify the areas of employment and welfare and undertake the provision of vocational guidance, technical training on non-traditional and traditional avenue.

3. Resolved that the interest-free financing institutions should be promoted at local levels.

4. Resolved that a Zakah institution should be established and its income should be used collectively in the light of Quran and Hadith.

5. Resolved that a survey of Islamic financial institutions should be undertaken by the   IOS to know its problems and potentials.

6. Resolved that efforts should be made to see that the provisions of banking legislation should be relaxed to accord status of banks to interest-free Islamic Institutions.

7.  For Awqaf is resolved that:

a) Waqf property should get the same protection as is available to the state as a Property   Act to prevent encroachment. The Waqf Property should be exempted from Rent Control Act and other such legislations as it is in the case of State properties.

b) A fresh survey of Waqf property should be undertaken.

c) Waqf Development Council should be constituted and allocation criteria for its expenditure should be evolved with a minimal for welfare programme.

d) Efficient management should be adopted.

8. Resolved that ‘Islamic Economies' and 'History of Islamic Thought' should be introduced at University level and research in Islamic Economics should be encouraged.

9. Resolved that:

a) Business directory and directory of Muslim Industrialists should be compiled.

b) Training for business management should be provided to encourage, small business ownership to enable them for efficient marketing, conduct of business financing and development.

10. Resolved that technical training programmes and skill formation for bright employment potential should be conducted by voluntary organisations of Muslims.

11. Resolved that sense of social obligation should be cultivated in public and private sector to purchase goods of small business organisations owned by Muslim Minority.

12. Resolved that State Minority Development Finance Corporations Board should be given the statutory status of financial institutions and their resources should be augmented,

13. Resolved that action oriented research for finding out alternative solution to crucial economic problems of mankind in Islamic Perspective should be encouraged.