The annual award, named after Daniel, who made the first silent movie in Kerala, was announced by Minister for Cinema Thiruvanchur Radhakrishnan here today.
A Janpith laureate, Nair (80) has made immense contributions to Malayalam cinema as script writer and director and many of his works are considered all-time classics.
As in literature, in cinema as well he broke a new ground through his scripts which harmoniously blended literary and cinematic elements.
His directorial debut "Nirmalayam" in 1973 won the National award for best feature film and brought the Bharat award for thespian P J Antony, who essayed the central role. Nair also won the national award for screenplay.
More From This Section
Viewers and critics have often acknowledged the scripts he penned were the vital component of the success of scores of movies since 1960s.
"As a screen play writer, MT has shown for the first time in Malayalam that cinema has its own language and grammar. A close look at his rich body of work will reveal that he has kept this in mind in while writing all his scripts," said film historian Balagopalan.
Born in a village on the banks of river Nila, many of his novels and stories narrate moving tales of strains and agonies of characters of a society undergoing transformation from feudal norms and ethos.
But there are also critics who consider his novel "Randamuzham", an exploration into the psyche of mythical character Bhima, as his magnum opus.
The award, comprising a purse of Rs 1 lakh, citation and memento, will be presented next month.