Zakat is an annual religious levy that is collected from rich
Muslims and its proceeds are disbursed among poor people of the society.
It has many spiritual and social merits. For example, it purifies the
hearts of zakat-givers as they give away a part of their wealth, one of
the most precious things in their lives, seeking the pleasure of God
without requiring any worldly gains whatsoever. It bridges the social
gap between „haves‟ and „have-nots.‟ This study analyses, however, only
economic consequences of Zakat for economic growth. They cannot be
appreciated duly unless one understands the following concepts of modern
economics; various theories of consumption, aggregate demand, stagnation
thesis, consumption puzzle, marginal productivity of capital and Kuznets
curve.