Thiruvananthapuram: The Centre has sanctioned a ₹529.50 crore loan under its capital investment scheme for the rehabilitation of landslide-hit areas in Wayanad, with the condition that Kerala must utilise the amount by March 31. State Finance Minister K N Balagopal has raised concerns over the stringent timeline, calling it a "huge practical problem."
The loan, provided under the Centre's 'Scheme for Special Assistance to States for Capital Investment 2024-25,' comes with conditions, including the requirement that the funds be forwarded to implementing agencies within 10 working days. Any delay beyond this period would make the state liable to pay interest to the Centre, calculated based on the weighted interest rate on open market borrowings for the previous year.
Addressing the media on Friday, Balagopal stated that Kerala had initially requested both a grant and a loan for Wayanad’s rehabilitation efforts. However, the state was only sanctioned a loan, not a grant.
"What we received was not a grant; it is a ₹529.50 crore loan under the CapEx (capital expenditure) scheme. It is a long-term loan that must be repaid. However, the requirement to utilise it within such a short period presents a huge practical challenge," Balagopal said.
Despite the constraints, Kerala will proceed with the rehabilitation work while formally conveying its concerns to the Centre about the difficulty of spending such a large amount within the given timeframe. The minister also pointed out that the loan was delayed and should have been provided earlier to facilitate smoother planning and execution.
Once all necessary clearances are secured, the state intends to move forward with the first phase of rehabilitation, which includes constructing a township within a year or by next year, Balagopal added.
Echoing similar concerns, Leader of Opposition V D Satheesan criticized the Centre’s decision, calling the March 31 deadline "impractical." In a strongly worded Facebook post, Satheesan accused the Central government of mocking the people of Wayanad by offering a loan instead of a special financial package, despite the region suffering immense loss.
"The affected people of Wayanad have lost their lives and livelihoods and are standing helpless. Instead of providing a much-needed special package, the Centre has sanctioned a 50-year interest-free loan for 16 projects, with an unrealistic deadline for utilization. This is an attempt to suffocate Kerala while pretending to help," Satheesan said.
He further alleged that while the Centre has extended financial assistance to other states hit by natural disasters, Kerala has been unfairly denied a special package of ₹2,000 crore.
"The Central government has a constitutional obligation to provide financial assistance. Denying Kerala its rightful aid undermines the federal structure envisioned by the Indian Constitution," he said.
Satheesan also warned that if the Centre does not revise its stance, the UDF will mobilize public protests against what he called the "inhumane neglect" towards the people of Wayanad and Kerala.
Additional conditions attached to the loan include ensuring that funds are not parked or misused and preventing duplication of funding for capital projects already approved under the scheme. The state must also obtain Centre’s approval for any necessary modifications to the designated projects.
Failure to adhere to these conditions, or the diversion of funds for any unintended purpose, could result in a deduction from Kerala’s future tax devolution, according to state government sources.
The loan approval comes amid strong criticism from both the LDF and UDF in Kerala, who had been accusing the Centre of neglecting the state's plea for financial aid in the aftermath of the July 2023 landslides, which claimed over 200 lives and wiped out three villages in Wayanad's high-range district.
With PTI inputs