The world is on the verge of financial collapse. If urgent and adequate steps are not taken, the consequences will be disastrous and go out of control. Only the Islamic financial system has the solution to this crisis confronting the world. This was the consensus emerged at a seminar on “Global Financial Crisis: Analysis and Solution in Islamic Economics” organised by Radiance Viewsweekly in collaboration with Jamaat-e-Islami Hind, Kolkata at Kalakunj on March 15.
Dr. Zafeer Ahmed gave a concise idea of the present crisis. He also deliberated on why and how America, which claims to be the superpower, has plunged the nation into a debt of 6 trillion dollars (which has been increasing at the average rate of $3.78 billion a day since September 28, 2007).
He said increasing consumerism is the main factor responsible for this phenomenon. It is consumerism which presents luxurious commodities as essential items and people feel tempted to buy them anyhow. This has further led to unemployment, selfishness and increasing cost of goods.
This crisis occurs from time to time but unlike the depression of 1929, today we don’t have John Menard Kynes to help us tide over this problem.
The solutions Dr. Ahmed suggested are: (i) The best system is Islamic financial system; (ii) Nullify interest (riba); (iii) Circulation of wealth by law of inheritance; and (iv) Both external and internal control on free economy.
A renowned economist, Prof. Amitava Sarkar of School of Management, W.B. University of Technology agreed with Dr. Ahmed that it really is a great depression of the time. It should be in the interest of all parties to seek solution and surely Islamic economics has one to offer. When the search for the origin of current financial depression was made, many flaws were found in the present system. Insufficient regulation and standards sparked the current economic prices.
The Islamic finance is just 1 per cent, but gives an annual growth of 15%, which even has a greater tendency to multiply in the future at a much faster rate. Many people are still unaware of richness of the Islamic system. Moreover the Islamic approach is different, being a neo-liberal global paradise not governed by narrow monetary market based approach.
Islamic finance can be looked upon as a safe haven due to increased number of products and services available. It is a traditional convention based on profit and loss structure rather than lengthened bordered area. The joint venture with the client initiates financial institutions also to benefit from it. Kerala Power Finance Corporation Limited (KPFC) has, in the Foreign Policy Journal,elaborated the basis of Islamic Finance which has its foundation on justice. Its other attractions are etiquettes and simplicity. The depositors should equally share profit and loss with the bankers and not just walk away with the profit. When the stocks fell by 500 points, it created an “implosion”, triggering negotiations and amendments without any success. In this neo-liberal world where technological transfer has lost its morality and created a huge spiritual deficit, the alternative paradigm to new liberalism lies in Islamic political economy as already practised in Latin America, South and South-East Asia.
Dr. Masihur Rahman, state secretary of J.I.H also laid stress on the solution lying only in Islamic economy. Nullifying riba and paying zakat are the only way-out.
Prof. Raj Kumar Sen of Rabindra Bharati University attributed the main cause of financial crisis to globalisation, in which we follow the west blindly but to no avail. According to him, Hindu economics, which is based on economics of plenty not scarcity, is totally opposite to Western economics. The earth has enough to supply the needs of everyone, not the greed of everyone.
Dr. Waquar Anwar, Financial Consultant of JIH and Secretary Board of Islamic Publications, talked on futures trade, and prime and sub-prime borrower. The present loss is estimated to be 600-1000 trillion dollars but only 10 trillion dollars have been raised so far to combat it. This amount is “too little and too late”. Big countries are following recessive depression and collapse aggravating asset fall down. It is like a financial bubble which can burst anytime.
Dr. Anwar said credit card has become a curse for society. It forces the people to spend much more than they can afford, thus mounting the interest amount.
In answer to the most striking question “Why is dollar still costlier than India rupee?” he replied, “The value is falling for both. It is only that the value of rupee is dropping at a much faster rate. The alarming fact is that apart from the loan the person’s income is just 13-20% and a bulk of new loan taken goes in repaying the previous loan. Thus a vicious cycle is set up.
There is always the risk of gambling in which amount remains same but the economy does not change. Thus capitalism can be defeated only if riba is abolished. Like the Qur’an, the Bible and even the Jewish Testament prohibit riba. He concluded that only Islamic law and financial system guarantees security of life, iman and also the opportunity to use one’s intellect without fear.