Introduction to

Islamic Economic SystemHow Khilafah would Solve Economic

problems of Pakistan

Imran Fawad

Opening Verses

Pre British Economy

1. India – Golden Sparrow2. India - Biggest Economy3. India – 25% of World GDP – $90b4. One Citizen, Abdul Ghafoor Had More Wealth than East India Company5. Jigget Seths of Bengal were wealthier than Bank of England6. Ghaneemat of battle of Palassi was more than Entire Europe’s GDP7. In the Era of Muhammad Shah Tughlaq: 10,000 Schools & 70 Hospitals in Delhi, 40,000 Schools in Bengal8. World’s Biggest Steel and Ship Manufacturing 9. Literacy Rate amongst Muslims was 87%10. Lord Mccaulay address to Parliament in 1835: “I have visited the length and breadth of India, and I have not seen a single thief and Begger. I have seen such wealth, High Moral standards and people of Calibre that I don’t think we would ever be able to conquer this land, unless we destroy its Spiritual (Islamic) and Cultural Heritage”

Pakistan’s Resources1. Population – 180Million2. Young Population – 65% (More than Germany & France)3. Area – 800,000km2 (More than Germany & UK)4. 10th Biggest Labour Force5. Energy Resources: Thar Coal – Worth $25,000b, Energy more than Saudi & Kuwait’s Oil Gas – Enormous Reserves (300Trillion Cubic Feet – Baluchistan)6. Minerals: Aluminum, Copper, Zinc, Iron, Gypsum, Phosphate, Silver, Marble, Ornament Stones. Gold (Riko Diq: $500b)7. Agriculture: Biggest River Network Wheat Production – More than Africa, Equal to South America (It can be Doubled) Top 10 Countries: All Vegetable & Fruits8. Military Technology: Fighter Aircraft Manufacturing, Submarines, Tanks, Nuclear Weapons, Missile Technology. 7th Largest Army9. Experts Engineers/Scientists: 2 Million PHDs: 7000

What Made us from Richest to Poorest ????

We are now (2012) Being Told that:1. We are Beggars and Corrupt2. We Cannot Stand upto America because we need its AID3. We are under Huge Debt4. Energy and Food Crisis is due to lack of Technology 5. Our Economy cannot run without Interest6. Our Issue is that People give less Taxes7. We Should Open Trade with India

The Capitalist Economic System: 1. Which was introduced by British and Continued in every Dictatorship and Democracy since Birth of Pakistan2. It is the Root cause of Economic Problems3. Pakistan’s Kufr Constitution Supports the Kufr Capitalist Economic System

COMPARISON

Capitalist Economic

System

Islamic Economic

System

1. Energy Crisis

Democratic System

1. Privatization of Energy Resources2. Freedom of Ownership Wealthy get the Benefit IPP Policy launched in 19943. Corrupt/Incompetent Political and Bureaucratic Class Only use Power Generation ways recommended by IMF etc Fake Crisis, to Divulge Public in these Matters4. Result: Fuel Shortage/Price Hikes

Khilafah System

1. Energy Resources are Public Property No Privatization No Tax, No Profit2. Not Nationalization3. Competent & Visionary Leadership Khilafah will use alternate sources Coal Wind Solar4. Result: Very Cheap Energy for Public and Industry

Economic System

2. Oppressive Taxes

Democratic System

1. Government has right to Impose TAX GST, Property Tax, Income Tax, Import/Export Duties, Fuel Surcharges etc2. Wealthy get the TAX Cuts3. IMF Dictates about Revenue Collection4. Blanket Taxation for Rich and Poor

Khilafah System1. Government Cant Impose Tax at will GST, Property Tax, Income Tax, Import/Export Duties, Fuel Surcharges etc2. Allah decided who would be taxed and How much Amount3. Defined Revenue Sources Three Diwans: Sadaqat, Public Prp, State Prp Zakat on Wealth and Trading Stock Ushr and Kharaj on Production Jizya on Non Muslims Hima from Public Prp Other Sources: Rikaz, Ghanaim, Fai, Emergency4. Relief for Poor, Increased Revenue, Relief for Traders and Manufacturers

Economic System

3. Inflation

Democratic System

1. Fiat Currency2. Government Prints Money at will 3 Trillion Rupees – Current Govt3. Result: Consistent Devaluation of Rupee 1 Tola Silver = 1 Rupee (Pre British Raj) 1 Tola Silver = 980 Rupees (At Present)

Khilafah System

1. Currency is 100% backed by Gold and Silver2. Extra Money cant be printed3. Fixed Weight of Currency Gold Dinar – 4.25g Silver Dirham – 2.975g4. Result: NO Inflation, Stable Prices

Economic System

4. Agricultural Reforms

Democratic System1. Ownership of Agricultural Land Separated from Cultivation

2. Feudal Setup land in few Hands, Uncultivated

3. Barren land – No Utilization4. No Technology Use to Increase Production5. Rural Economy is destroyed4. Result: Mass movement towards Cities, Unemployment, Production Below potential

Khilafah System

1. Ownership based on Cultivation Land Must be Cultivated – 3 years Rule2. Ban on leasing of Agricultural Land3. Barren Land Ownership Based on Usage

4. Result: Increased Production, Rural Economy revival, Mass employment

Economic System

5. Foreign Loans

Democratic System1. Government decides upon foreign Loans and their contracts/Conditions2. Huge Interest and Severe Conditions 3. Role of IMF and World Bank4. These heavy amounts get into Pockets of Rulers and Foreign Accounts Morgan Trustee Bank: 1000/1500 b$ return back5. Countries get into never ending trap Pakistan: 1990 – 2005 (20b$) 2007 – 2010 (6b$ + 2.6b$ Interest) Pakistan: 2010 – 2011 (loan Taken 287bRs, loan returned 319bRs: 76princ + 279Interest)4. Result: Shortage of Resources, Extra Burden on Economy

Khilafah System1. Cannot take foreign loans absolutely2. NO to Interest based Dealings3. NO to IMF and World Bank4. Take back all Money from Corrupt Ruling Class5. Say NO to Remaining Interest Return back Original Amount from Rulers confiscated wealth6. We don’t need any Foreign loans for our Needs

Economic System

6. International Trade

Democratic System

1. Third world countries – Consumer Markets2. Free Trade / WTO3. Trade with US, EU and India4. Custom Tariffs5. Chinese Model – Export Based Economy6. Result: Consumer Market/Multi Nationals’ Monopolization of Markets

Khilafah System

1. Islam Prohibits trade with Enemy States (India, US, UK etc)

2. NO to Free Trade3. Custom Tariffs are not Allowed If other country does impose, than Khilafah would do reciprocally4. Islam doesn’t want State to be a Consumer Market 5. Islam’s Model is Self Sufficiency Based Economy6. Result: Self Sufficient Economy

Economic System

7. Basic Needs

Democratic System

1. Government’s Focus is: Increase Production (GDP, GNP)

Ensure Freedom of Buying/Selling (Open Market)

2. Focus on Overall Economy Not on People Not on Specific Sectors3. Muslims are dying of Hunger & in need of Help. Billions are being Spent on Roads & Sports

Khilafah System

1. Fulfilling Basic needs of every individual is Khalifah’s Personal responsibility Example: Famine in Medina2. Focus on Distribution and not Production3. Funds spending based on Need and not Population or Production All resources belong to whole Ummah

Economic System

8. Virtual Economy

Current System

1. Banks, Gambling2. Stock Exchanges3. Bonds/Lotteries4. Future Trading5. Limited Companies (Pvt/Public)6. Insurance Companies7. Interest Based Banking and Trading8. Mortgages

Khilafah System

1. All are Not Allowedfrom Islam

2. Islam has its own Company/Partnership

Structure and Business Model

Economic System

9. Is Pakistan Dependent Upon International Aid ?

Democratic System

1. Government Corruption = ~400b2. Deb Servicing = ~400b3. Rise in Defense Budget = ~350b (From 350b to 800b in 2011)4. Loss Due to War on Terror = ~1530b

(All Statistics are of Year 2010-2011)

Total Direct Loss to Budget = ~1150bTotal Indirect Loss to Economy = ~1530b

US Aid to Pakistan = 1.2b$ = 110b

Khilafah System

1. End Corruption2. Stop Debt Servicing (Interest)3. Stop Spending on US War on Terror

DO WE NEED US AID????

Economic System