The poor people in Pakistan can be provided monthly food free of cost !!


Claim:

The poor people  in Pakistan can be provided monthly food, free of cost by just implementing following simple solution

  • Implementation of Zakah System
  • Bringing back looted money of this country from Swiss bank accounts and investing it to generate free monthly Wazifa for poverty stricken people


Explanation

This article provides a road map for quick alleviation of poverty from Pakistan. Eventually this model will be followed by any new government from the Islamist who will lack expertise knowledge in financial and economical systems, yet will be able to alleviate poverty in just 3 years time. This will happen by the virtue of the sincerity to the cause and their ability to immediately put to justice, the corrupt political elite and to materialize actions without getting blackmailed. 

 

Total Pakistan population = 180,000,000 People

File:Socio-Economic Status of Pakistanis.png

Source:  http://en.wikipedia.org/wiki/Poverty_in_Pakistan

The rich and upper middle class mostly lives in urban cities and usually are covered under the existing tax-net system and their businesses can be fully documented. the annual collection of zakat @ 2.5% can be enforced easily because of the ‘Religious Factor’ involved. Currently, all the banks in Pakistan are  obliged to deduct the zakkat automatically. The collection of zakkat and its distribution should be carefully watched and given under the management of highly trustworthy team of honorable nationals. The additional money can be generated through the investment of the public money in the swiss accounts.

Quick Understanding of Zakah

The amount of Zakat to be paid by an individual depends on the amount of wealth, and the type of assets the individual possesses. The Quran does not provide specific guidelines on which types of wealth are taxable under the zakat, nor does it specify percentages to be given.[citation needed] The amount of zakat to be paid on capital assets (e.g. money) is 2.5% (1/40).[11] Zakat is additionally payable on agricultural goods, precious metals,minerals, and livestock at a rate varying between 2.5 (1/40) and 20 percent, depending on the type of goods.[12][13] Zakat is separate from the practicekhums, where Shi’ites are additionally expected to pay one fifth of their income.[14]

Zakat is only payable on assets continuously owned over one lunar year that are in excess of the nisab, a minimum monetary value. The nisab is calculated after adding the cash value of zakatable assets (gold, silver, cash, stocks, merchandise for business, livestock etc.). Personal assets such as clothing, household furniture, one residence etc. are not considered zakatable assets. The nisab for gold and other money is the value of 85 grams of gold at world prices. Thus, at 2012 prices, the nisab for such assets was USD $ 5,200.[11]

Source: http://en.wikipedia.org/wiki/Zak%C4%81t

Assumption:

  1. Average Family Size = 5 People
  2. Conversion rate = 85 (Dollar to Rupee Rate)
  3. Each family has at least one earning member
  4. Each poverty stricken family can earn at least 1,500 a month
  5. The Rich and Upper Middle class family have accumulated wealth > Nissab (i.e  442,000 PKR of wealth / USD 5,200, 2012 data)
  6. Pakistan GDP = 200 billion USD (2012)

Total Families in Pakistan

Total Families in Pakistan = Total Population / Average Family Size

Total Families in Pakistan = 180,000,000/ 5 = 36,000,000 families

Total Rich Families in Pakistan

= 15,000,000 / 5

= 3,000,000 Families

Total Upper Middle Families in Pakistan

= 25,000,000 / 5

= 5,000,000 Families

Total Desperately Poor Families

= 65,000,000 / 5

= 13,000,000 Families

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An approximate estimation of Income of Rich and Upper Middle Class

Assumption from observational data

Average monthly income of rich families …………….=  500,000 PKR
Average monthly income of upper middle families….=  200,000 PKR
Savings rate of rich families = 40%
Savings rate of upper middle class families = 30%

Total yearly income of rich families = 12 months * monthly income * # of families
Total yearly income of rich families = 12 * 500,000 * 3,000,000
Total yearly income of rich families = 18,000,000,000,000 PKR

Total yearly income of U. Middle families  = 12 months * monthly income * # of families
Total yearly income of U. Middle  families = 12 * 200,000  * 5,000,000
Total yearly income of U. Middle  families = 12,000,000,000,000 PKR

Total savings = Total Rich Savings + Total U. Middle Savings
Total savings = 40% ( 18,000,000,000,000) + 30% (12,000,000,000,000) PKR
Total savings = 7,200,000,000,000 + 3,600,000,000,000 PKR
Total savings = 10,800,000,000,000 PKR

In order to simply the calculation of zakah…

We assume that a rich or an upper middle class family increase wealth from following two ways

a. Savings from the income of the current year
b. Profits earned from the investments made in the previous year

1. Zakah applicable on the savings in the bank at the end of each fiscal year (Monetary Zakah)
2. Zakah applicable on the long-term investments in private sector and public sector (Montary Zakah)

Total Zakah = 2.5% of ( Total Savings in the fiscal year + Total investments)

investment-spending

From the chart (Table 1 – Investment behavior), we assume that currently in 2012, the total investment is just 5% of the GDP. Because of the law and order situation.
Total Zakah = 2.5% ( 10,800, 000,000,000 PKR + 200,000,000,000 USD)
Total Zakah = 2.5% ( 10,800, 000,000,000 PKR + 17,000,000,000,000 PKR)
Total Zakah = 695,000,000,000 PKR


Worth noting that the charity donation in the developed countries (USA, UK and CANADA) is well below 2.5%.

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Calculation of Zakkat Per family Below-Poverty Family

Zakat yearly per family = 695,000,000,000 PKR / 13,000,000 = 53,461 PKR
Zakat monthly per family = 4,455 PKR per family a month = 55% of minimum wage
(According to data, minimum wage as of 2012 is PKR 8,000)

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Calculation of minimum monthly food Consumption by poverty stricken people

Below poverty level – Pakistanis eat roti 3 times per day
Price of one roti = 6 PKR
Price of roti consumed per month per person
= 6x(3 times)x(31 days) = 558

Price of roti consumed per month per family
= 558 * 5 = 2790

with ‘Roti’ (Bread) following meal can be taken
(spread out in number of days)

Cost of 10 days tomato sauce + onion = 1,500
[10 d *  3 kg.p.day * 50 (PKR per kg)]

Cost of 10 days egg omelette = 1,200
[10 d * 5 people * 3 egg.p.day * 8 (PKR per kg) ]

Cost of 10 days potato paste = 1,750
[10 d * 5 people * 1 kg p.day * 35 (PKR per kg)]

Cost of 31 days milk = 2,490
[31 d * 1 liter per day *  80(PKR per kg)]

Monthly Expense for Food Consumption
Per family = 6,930 PKR per family

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Monthly Income from Swiss Money

cash

Pakistanis looted money in the Swiss bank accounts = 97 billion Dollars
Source: http://www.pakistantoday.com.pk/2011/09/18/news/national/pakistan-has-97-billion-dollars-in-swiss-banks-director-swiss-bank/

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Assume 70% Recovery is possible (due to legal problems)

Money recovered from Swiss bank = 67.9 billion Dollars

Assume we will invest this money in some foreign shariah-compliant money/stock market instrument

assume we get on average 8% annual profit, then

Profit Received = 68 billion * 0.08 Dollars annually

Profit Received  = 5,4440,000,000 Dollars annually

Profit received  = 462,400,000,000 PKR

Profit Distributed per poor family =  462,400,000,000 PKR / 13,000,000

Profit Distributed per poor family = 35,570 PKR per year

Profit Distributed per poor family = 2,964 PKR per month

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Conclusion

For each poverty-stricken family in Pakistan, following monthly income could be generated, through the mentioned sources

Monthly Income through the Zakah………..= 4,455 PKR
Monthly Income through the Profit earned = 2,964 PKR

Monthly Income Total…………………………= 7,419  PKR

Extra Income generated through work…….= 1,500 PKR

Total Income for a Poverty Stricken Famil..= 9,919 PKR
(or $120 per month)
.

After Food savings = 8,919 – 6,930 =1,989

Assuming family of father mother and three children

Kids can go to school by paying 500 * 3 = 1,500 PKR government school fees

After Food and Education savings = 489 PKR for medicines and Transportation

Note: More money will be available for medicines and transportation if these kids are admitted for free primary education at islamic madressahs.

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No Pakistani will die of hunger and no Pakistani will be seen begging on the roads !

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The Zakkat Management and Distribution System

  1. An independent institution should be formed e.g “Bait-ul-Mal Department (Zakkat Distribution Ministry)” to provide over watch to the system
    1. Receive annual funds from Government
    2. Issuance and distribution of the Certificates of Eligibility to the registered families below poverty line
    3. Communication campaign of public awareness
    4. Establishing network with the designated Imams of the local mosque, Priests, Pandits, Rabbis and the highly educated class and empowering them to issue ‘Certificate or cards of Eligibility’ on government’s behalf to the needy people
    5. Eligible families can receive these certificates from the designated people and produce them in any nearest branch to get free accounts and a free debit card, issue to them

Role of Zakat in the Society

The zakat is considered by Muslims to be an act of piety through which one expresses concern for the well-being of fellow Muslims,[23] as well as preserving social harmony between the wealthy and the poor.[24] Zakat promotes a more equitable redistribution of wealth, and fosters a sense of solidarity amongst members of the Ummah.[25]

Zakat is meant to discourage the hoarding of capital and stimulate investment. Because the individual must pay zakat on the net wealth, wealthy Muslims are compelled to invest in profitable ventures, or otherwise see their wealth slowly erode. Furthermore, means of production, such as equipment, factories, or tools, are exempt from zakat, which further provides the incentive to invest wealth in productive businesses

Source: http://en.wikipedia.org/wiki/Zak%C4%81t

Authored by

Ammar Ahmed Siddiqui

B.E. Computer Systems Engineering
M.B.A Marketing

Proj. Manager
Global Industrial Defense Solutions
(GIDS Pakistan)

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References:

  1. http://en.wikipedia.org/wiki/Poverty_in_Pakistan
  2. http://www.numbeo.com/cost-of-living/country_result.jsp?country=Pakistan
  3. http://dawn.com/2012/05/01/minimum-wage-increased-to-rs-8000-eobi-pension-to-rs-2000/
  4. Pakistan 97 Billion Dollar looted wealth in Swiss bank – Says swiss bank director
    http://www.pakistantoday.com.pk/2011/09/18/news/national/pakistan-has-97-billion-dollars-in-swiss-banks-director-swiss-bank/

Additional Reading

Member Suggestions

  • Free Food Camps can be organized where the poor can be fed. The food need not be scrumptious, but should be edible. These food camps need not be offered daily, but at least once a week or probably even a month, if it is difficult to host. There should be steps taken to make sure that many organizations and socialites participate in these events voluntarily. With some steady inflow of money, these camps can then be regionalized and then expanded. [Tooba Arshad]
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