Joseph, who won the prestigious honour for her novel 'Aalahayude Penmakkal' (Daughters of God the Father), said she would soon send the cash prize and plaque to the Akademi via courier.
This is the first time that a Malayalam writer has decided to return the Akademi honours to protest against the "communal policies" of the BJP-led NDA government.
She said three writers had already been killed and K S Bhagwan was facing life threat from communal forces. But, the Centre had done nothing to alleviate the growing fear among writers and activists and people in other sections of the society, she said.
Sixty-eight-year-old Joseph, who spearheaded feminist writing in Malayalam, also felt what Jnanpith laureate U R Ananthamurthy had said years ago about the life of writers under the Modi government was "absolutely true".