Wayanad landslides: Centre's loan conditions face flak; Kerala govt seeks flexibility

The Central government’s approval of a Rs 529.50 crore loan for rehabilitating landslide-affected areas in Wayanad, Kerala, under the Scheme for Special Assistance to States for Capital Investment 2024-25 has triggered strong protests from both the ruling Left and the Opposition in Kerala. The loan comes with the condition that the funds must be utilised by March 31, a stipulation that has drawn criticism from the Kerala government, the Left Democratic Front (LDF), and even sections of the Congress party. While the government plans to formally express its displeasure, the Congress has indicated its willingness to protest alongside the CPI(M).

Also read: Kerala to declare people missing in Wayanad landslide as 'dead'

The sanctioned loan aims to support 16 projects, including the construction of public buildings in new rehabilitation townships, reconstruction of the Chooralmala bridge, and the Vellarmala and Mundakkai schools, all of which were destroyed in the landslides. The interest-free loan, repayable over 50 years, was granted following Kerala's request for financial assistance after severe landslides in July of the previous year resulted in over 200 deaths and the destruction of three villages in Wayanad.

In fact, Kerala had sought Rs 2,000 crore from the National Disaster Response Fund (NDRF) for recovery and reconstruction, particularly for rebuilding townships for disaster-affected people, but this request was entirely denied.

Also read: Centre recognises Wayanad landslides as disaster of ‘severe nature’

“Despite other states like Andhra Pradesh, Telangana, Tamil Nadu, Bihar, Chhattisgarh, and Uttarakhand receiving advance grants from the National Disaster Response Fund, Kerala’s request has been rejected, even after submitting all necessary reports and assessments. Additionally, the loan sanctioned through the Budget comes with impractical conditions that make its implementation nearly impossible. This denial is seen as not just a challenge to the Kerala government but a direct attack on the people of the state,” opines M Gopakumar, a former State finance ministry official.

Kerala Finance Minister KN Balagopal expressed concerns over the practicality of utilising the funds within the stipulated timeframe. He noted that while the state government had requested both a grant and a loan, only the loan was sanctioned, and its conditions posed a "huge practical problem". Balagopal added that the state government would proceed with the rehabilitation work but would communicate the difficulties of meeting the deadline to the central government.

Also read: Landslide disaster relief: Centre 'adding chilli' to wounds, says Kerala FM

“The Union government is making a mockery of us Keralites,” said Dr TM Thomas Issac, former finance Minister. “Fixing dates for repayment is normal. But it is weird to fix dates for spending a loan is crazy,” he added.

Opposition parties voice strong criticism

Adding to the unease is the requirement that the released amount be forwarded to implementing agencies within 10 working days. Delays beyond this period would incur interest charges for the state, calculated at the weighted interest rate on open market borrowings from the previous year. Additionally, the Central government has stated that using the loaned amount for purposes other than those intended would lead to a deduction from the state's tax devolution in subsequent periods. Opposition parties in Kerala have also voiced strong criticism of the Central government's decision to provide a loan instead of a special financial package. VD Satheesan, the Leader of the Opposition in the Assembly, described the move as "mocking the affected people in Wayanad" and accused the Centre of "trying to suffocate Kerala while pretending to help it". Satheesan argued that the Union government is constitutionally obligated to provide financial assistance to Kerala, especially considering the extent of the damage caused by the landslides.

Also read: Wayanad landslide: Rehab of victims hits roadblock after firm moves HC

“This is outrageous and we are ready to fight hand in hand with the ruling CPI(M) for the people of Wayanad,” said K Sudhakaran, the Kerala Pradesh Congress Committee (KPCC) president.

The Central government's decision has been met with criticism from various quarters, with many questioning the feasibility and fairness of the imposed conditions. The requirement to utilise the funds by March 31 has been widely deemed impractical, given the scale and complexity of the rehabilitation projects. Critics argue that such a stringent deadline could compromise the quality and effectiveness of the rehabilitation efforts, potentially leaving the affected communities in Wayanad in a precarious situation.

Despite the challenges and criticisms, the Kerala government has affirmed its commitment to proceeding with the rehabilitation work. Balagopal said that the state is still hopeful of receiving a grant from the Centre and that consultations are underway to ensure the efficient utilisation of the loan. The state government plans to convey the practical difficulties of meeting the deadline to the Central government and seek flexibility in the utilisation of funds.

The Wayanad rehabilitation project includes constructing new infrastructure and restoring damaged facilities. The state government has received offers from various sources, including Karnataka Chief Minister Siddaramaiah, who offered to construct 100 homes.