Bengaluru: In flood-ravaged Kerala, the state government has devised a novel scheme for affected households looking to get back on their feet by providing them nearly interest and collateral-free loans.

Pegged at ₹ 25,000 crore, the massive private damages in the shape of loss of property and livelihood has been a concern for Kerala government, staring as it is at an equal outgo to restore public damage infrastructure. The state hopes this scheme will boost household expenditure and help aid the recovery of the economy, which is otherwise on a downward spiral.

Under the scheme, people can access credit of at least ₹ 1 lakh through Kudumbasree, Kerala’s four million-strong women’s network. The Kudumbasree network, operating through small community forums, will receive requests for loans from individuals, evaluate them, and apply in bulk at banks. The government will pay the interest for these loans, upto 9% rate. About 1.24 lakh people have applied so far, as per official statistics.

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“About ₹ 120 crore may have to be spent from the government kitty towards financing the interest. For this we are launching a new lottery, called ‘Nava Keralam Lottery’. The net receipts of the lottery will be enough to finance the interest burden," said a Kerala finance ministry official, requesting not to be named.

Restoring the private damages is crucial for the state. Kerala finance minister Thomas Isaac told Mint in an earlier interview that hardly anyone is buying or selling anything in the unorganized sector. “There is no construction, no activity in small scale and traditional industries," he said on 23 August. The minister expects Kerala’s gross state domestic product (GSDP) to come down by at least two percentage points in this context, devastating for an economy that has been growing faster than the national average, at 7.4% compared to 7.1% India’s growth, as per official statistics from 2016-17.

Besides the loan initiative, the government expects its web of social security measures, a hallmark of Kerala’s governance, especially when the Left is in power, to be a bulwark against the liquidity crunch.

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“So far we have sent home ₹ 4,000-6,000 to each of the 52 lakh persons deserving to avail some form of social security pension. This should make an impact," said the above mentioned finance ministry official.

Parallely, the government is also trying to negotiate with major brands, especially those in the home appliance sector, to avail their products to these loan beneficiaries at 40-50% discount.

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Representatives of eleven companies, such as Sony, LG, Godrej, Samsung, Panasonic and Whirlpool met with state commerce minister E.P. Jayarajan on Tuesday to discuss this matter, said the official. The idea is to give the beneficiaries a hologram-marked identity card, so that they can avail these discounts in their purchase with these brands at any shop, he said. The move is likely to be finalized by this weekend, he added.

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