Centre sanctions ₹529.50 crore loan for Wayanad rehabilitation

The Centre has approved a ₹529.50 crore loan for landslide rehabilitation in Wayanad, requiring utilization by March 31.

The Centre has sanctioned a loan of around ₹529.50 crore under its capital investment scheme for the rehabilitation of landslides hit areas of Wayanad with a condition that Kerala has to utilise the amount by March 31, state Finance Minister K N Balagopal has said and termed the stipulation as a "huge practical problem."

Under its capital investment policy, the Centre has approved a loan of around ₹529.50 crore for the restoration of Wayanad's landslide-affected regions, with the requirement that Kerala use the funds before March 31.(HT photo)

The conditions attached to the loan under the Centre's 'Scheme for Special Assistance to States for Capital Investment 2024-25', require that the released amount be forwarded to the implementing agencies within 10 working days. If there is any delay beyond that period, the state will be liable to pay interest to the Centre on the amount released, as per the weighted interest rate on open market borrowings for the previous year, it said.

Reacting to the development, Balagopal told reporters on Friday that the state had requested both a grant and a loan for the rehabilitation of landslide-hit areas in Wayanad district. "What we received was not a grant; it is a loan of ₹529.50 crore under the CapEx (capital expenditure) scheme. It is a long-term loan that must be repaid. However it must be utilised very quickly, which is one of the loan's conditions. That poses a huge practical problem," the minister claimed.

He said that despite the conditions attached to the loan, the state will proceed with the rehabilitation work and will convey to the Central government the practical difficulties of utilising such a large amount within a short timeframe—by March 31. Balagopal added that while Kerala has not received any grant, which is typically provided in the event of such disasters, the loan was also delayed.

"They should have provided it a bit earlier," he said. Nevertheless once all clearances are received, the state will proceed with the first phase of rehabilitation work, including the construction of a township within a year or by next year, the minister said. Agreeing with Balagopal, Leader of Opposition in the Assembly, V D Satheesan also said that the condition to utilise the loan amount by March 31 was "impractical."

In a hard-hitting criticism of the Centre's move Satheesan, in a Facebook post, said that providing a loan instead of a special financial package for the rehabilitation work amounted to mocking the affected people in Wayanad, who have "lost their lives, livelihoods and are standing helpless." He said that by providing a 50-year interest-free loan for 16 projects, which must be utilised by March 31, the Central government was "trying to suffocate Kerala while pretending to help it."

Satheesan said that the same Central government, which provided financial assistance to other states affected by natural disasters, was denying it to Kerala, which rightfully deserves a special package of ₹2,000 crore. "The Central government also has a constitutional obligation to provide it. This action undermines the very federal structure envisioned by the Indian Constitution," he said. "The inhumane neglect shown by the Central government toward the people of Wayanad and Kerala can never be justified.

The Central government should immediately correct its stance on Kerala; otherwise the UDF will organise a strong agitation by mobilising the people against the Centre's stand," the opposition leader claimed. The other conditions attached to the loan include ensuring that funds are not parked and avoiding duplication of funding for capital projects approved under the scheme.

Additionally, the state must seek the Centre's approval for any unavoidable changes to the specific projects for which the loan has been sanctioned, state government sources said. They also said that the Centre stated that using the loaned amount for any purpose other than its intended use would result in a deduction from the state's tax devolution in subsequent periods.

The loan was sanctioned following severe criticism of the Centre by the LDF and UDF in Kerala over the non-grant of financial assistance for the rehabilitation of disaster-hit areas in Wayanad. Over 200 lives were lost in landslides that wiped out three villages in the high-range district in July last year.