A landslide-devastated house at Mepaddi in Wayanad| PTI
With assets wiped out, crops lost and livelihoods ruined, disaster-hit families desperately need new loans or relief from existing debts
The women of Wayanad affected by the devastating 2024 landslide that scarred their lives and lands achieved a significant victory at the Kerala High Court on October 8.
A bench headed by Justices AK Jayasankaran Nambiar and Jobin Sebastian rapped the central government for what it called the “unfortunate” denial of loan relief to the aggrieved women.
The bench also expressed disappointment at the “Shylockian methods” adopted by the banks in their unwillingness to write off the loans. The ravaging Wayanad landslide was seen by independent experts and even by the United Nations as a destructive consequence of heavy rainfall driven by human-made climate emergency.
Burden of loans on vulnerable in a disaster
A battle is being fought between the disposables - the little people of history, the poor and the vulnerable - who are at the receiving end of the climate crisis on one side, and an apathetic government on the other side, which remains impervious to the challenges posed by the increasing frequency of climate extreme events.
While there has been at least some public discourse around the more obvious aspects of this apathy and inaction, an aspect that remains less appreciated is the long-term financial implications for those most vulnerable.
Also Read: Kerala HC slams Centre over loan waiver for Wayanad landslide survivors
From the fields of Punjab to the swanky streets of Gurugram, from farmers in Maharashtra to rural Bihar, from the slopes in Uttarakhand to the hills in Kerala, newspapers and reels are flooded with news of landslides, cloudbursts, and ever more frequent cyclones. Be it the heatwaves or the rising sea temperature, be it the melting glaciers or the drying rivers, the crisis is coming in many shapes and sizes.
Along with the human cost these disasters inflict on the people, each of them also has financial implications. For the poor, recovery from disasters is invariably prohibitively costly. Already indebted, they desperately need new loans or, at the very least, relief from lenders for the existing debt burden. This is because their meagre assets have been destroyed, crops lost, or livelihoods impaired. Recovery is a long haul.
Court laments Centre’s refusal to write off loans
It is in this respect that the battle being fought by the women of Wayanad in the streets and the courtrooms assumes importance.
The High Court in its order on the women’s writ petition reflects on the plight, “Having lost their lands, and their means of livelihood, in the devastating landslide, they are now being called upon to repay the loans availed by them for agricultural and related purposes when the very property that they had offered as collateral security while availing those loans has ceased to exist. This is nothing short of an affront to their dignity which has been recognised as an aspect of their fundamental right to life under Article 21 of the Constitution.”
Also Read: Wayanad landslide, one year on: Scars remain, but hope endures
The court lamented the inaction, and much worse, the refusal of the Union Government to use its powers to write off the overdue loans of the women of Wayanad. Notably, the court seemed to recognise the prerogative of the government in the matter and refrained from ordering it to write off loans. However, the court stayed loan recovery from Wayanad landslide survivors till it disposed the petition.
But before we move further, we should give here the fuller context and the prehistory to this order.
Context of court’s intervention
In the early hours of July 30, 2024, Chooralmala and Mundakkai villages in the district ofWayanad in Kerala were hit by devastating landslides that claimed more than 250 lives, and the villages were literally wiped off the face of the earth.
"With thousands of homes and agricultural lands damaged, people were in a precarious situation when loan agents approached those living in relief camps to recover EMIs for loans they had taken," share activists Maju Varghese and Sarath Cheloor from Friends of the Earth India.
This is what triggered a mass outrage among the villagers.
Also Read: Kerala govt to deposit Rs 17 cr more for Wayanad rehabilitation township land: HC
With the involvement of civil society who took the matter to the district credit committees and the state government, a legitimate demand for loan waiver was raised. The Kerala government responded favourably, and thereby the Kerala Bank declared a loan write-off for those affected.
The incident also demonstrated the collective and individual mental trauma that such disasters leave in their wake. Besides the loss of assets and injuries sustained by loved ones in the community, a key ingredient of the mental health aspect of such disasters is the financial avalanche that is brought about. Assets are lost, debts increase, livelihoods are destroyed; this happens even as loan recovery agents come knocking at the victims’ doors, further exacerbating the anxieties of the community.
Post-disaster financial relief a pan-India issue
This issue extends far beyond Kerala as India finds itself in the grip of human-engineered climate disasters which are fast turning into debt disasters. In 2023, after the devastating glacial lake outburst flood destroyed the Rs 14,000 crore Teesta stage 3 dam killing hundreds and devastating assets and livelihoods of thousands in Sikkim and West Bengal, the National Green Tribunal had taken suo moto cognisance.
More recently, in the aftermath of catastrophic floods in Punjab, the state government announced a loan moratorium for six months. Instead of state policy being informed by good practice, instead of evolving our policy landscape such that they are more climate sensitive, the steps taken by the union government in the aftermath of the Wayanad landslide unfortunately were much to the contrary.
Centre’s cynical response
Acting cynically, the Centre quickly moved amendments to the National Disaster Management Act. The fact that the Kerala government used the Sections of the Disaster Management Act to argue for the loan write-offs in Wayanad seem to have alerted the Central government.
As a result, the Amendments, among other measures, removed the clause allowing for waiver of loan repayments. It is instructive, however, that earlier this year, the Kerala High Court said that the Union Government cannot cite this amendment to deny waiver of loans to the Wayanad victims.
Also Read: Not waiving loans of Wayanad landslides victims a betrayal: Priyanka Gandhi
It is unfortunate that the union government's response has remained rather cold and devoid ofempathy. It simply said the RBI directions on Relief Measures by Banks in Areas Affected by Natural Calamities contain “no provision for loan waivers”. This typically bureaucratic response, of course, hides behind the pretence of maintaining the “autonomy” of the banking institutions.
The government claims that it only gives “policy support” to the public sector banks, and nothing more. It begs the question as to why climate sensitive banking practices are not part of its policy prescriptions.
Duality in approach to loan waivers
The decision to grant loan waiver, it claims, is “beyond the administrative powers of the Department of Financial Services, Ministry of Finance”. It claims that the government does not “interfere” in such matters.
Thomas Franco, the former general secretary of All India Bank Officer's Confederation, writes, “When banks could write off Rs 25 lakh crore in the last 10 years, especially to the corporates, when the average haircut in National Company Law Tribunal referred cases is 67 per cent, the banks should be generous in writing off loans of people in such disasters.”
Also Read: Eight months on, landslide-hit Mundakkai, Chooralmala remain ghost towns
The High Court judgement, while expressing its disappointment with the Centre's hands-off approach, also recognises the banks’ and financial institutions’ accountability to step in with relief measures in the face of climate disasters. The court not only stayed the loan recovery proceedings but went on to order the banks to file counter-affidavits explaining whether they are willing to waive the loans availed by the landslide victims in Wayanad, and if not, their justification.
In the wake of this year's catastrophic disasters, more than 100 civil society organisations – among them individuals such as Medha Patkar of Narmada Bachao Andolan, environmentalists Ravi Chopra and Disha Ravi, along with collectives such as Himdhara Collective, Friends of the Earth India, National Alliance for Peoples’ Movements, All India Women Hawkers Federation, and the Centre for Financial Accountability — have jointly appealed to the Union Finance Minister, RBI, scheduled commercial banks, non-banking finance companies, and microfinance institutions for urgent loan relief to households, individuals, and small enterprises devastated by the 2025 monsoon disasters.
Normative standards needed urgently
In the aftermath of the calamity, the action of the banks and the Union Government’s stoic silence on the matter raise urgent questions about the need for normative standards to be followed by the government as well as financial institutions dealing with such disasters.
This would remove the discretionary element that has characterised the government’s response to recent disasters, which has generated much controversy. Such normative standards would ensure that speedy and meaningful relief is delivered at the earliest, without political bias. Only then can those whose livelihoods have been rudely upendedresume their lives with a degree of normality at the earliest.
Also Read: Wayanad landslides: Centre's loan conditions face flak; Kerala govt seeks flexibility
It is high time that a public discourse be initiated on the financial aspects of the climate crisis and the measures that need to be factored into our financial landscape to respond, adapt, and mitigate effectively.
While the government and financial regulators, such as RBI and bank managements, ceaselessly lecture us on climate risks at global and domestic fora, the question is: are they willing to walk the talk?
(The Federal seeks to present views and opinions from all sides of the spectrum. The information, ideas or opinions in the articles are of the author and do not necessarily reflect the views of The Federal)
