Economics of Zakat in India an empirical analysis with special reference to Kerala

Abstract

Zakat, a compulsory form of charity in Islam, is an important mechanism for the redistribution of wealth and the promotion of economic balance in society. Beyond being a religious obligation, Zakat functions as a social support system that helps reduce poverty, decrease income inequality, and assist economically disadvantaged people. Islam instructs wealthy individuals to give a portion of their wealth to those who are eligible to receive it. This practice encourages mutual support among members of society and strengthens social unity. When Zakat is distributed properly through organized institutions, it can complement government welfare programmes, improve the living conditions of people, and enhance social stability. In modern economic discussions, Zakat is increasingly recognized as a system that can contribute to financial inclusion, the advancement of marginalized groups, and the development of local economies. This study examines the economic structure of Zakat, its management, and its economic and social impacts within the Indian context, with special focus on Kerala. Although the practice of Zakat is widespread in Kerala, a large part of it is still carried out in an informal manner. The study analyses how Zakat is collected and distributed, the types of assistance provided, and the socio-economic conditions of the beneficiaries. It also examines how Zakat funds are used in important areas such as education, healthcare, housing, livelihood support, and basic living needs. To measure the changes brought about by Zakat assistance in the lives of beneficiaries, the study develops specific indices to assess both economic and social impacts. In addition, the study evaluates beneficiary satisfaction by examining their views on the adequacy of assistance, timeliness of support, fairness in distribution, and responsiveness of the services provided. The research adopts a mixed-methods approach that combines quantitative data and qualitative insights. Four major Zakat-distributing institutions were selected based on the scale of their operations. To ensure regional representation, Kerala was divided into three zones—North, Central, and South. Data were collected from Zakat beneficiaries using structured questionnaires through a multistage random sampling method. Statistical techniques such as factor analysis, multiple regression, and path analysis were used to analyse the data.The study assumes that Zakat distribution in Kerala mainly targets economically vulnerable groups and that assistance is largely provided based on need. It also suggests that Zakat assistance brings positive economic and social changes in the lives of beneficiaries, which in turn influence their level of satisfaction. Therefore, the study highlights the need for more organized, transparent, and effective systems for managing Zakat in order to enhance its effectiveness in India.