Before you ask that question, you must first ask another: why do writers write?
Not everyone writes from a desire to add "author" to his/her resume. For most writers, writing brings little except the risk of poverty and disparagement if they invest too much time doing it. It takes a lifetime to polish the craft and even if one wins an award, few awards are generous enough to keep body and soul together for longer than a few months.
Yet people surrender sleep and leisure time, trying to write novels, poetry, play, short stories, or translating the words of other writers. It is a form of sharing, of listening. Some write of the dangers of certain ideas as George Orwell did with 1984 and Animal Farm; some play with possibility, turning an idea we take for granted on its head as Ursula le Guin did with The Left Hand of Darkness. Others show us the violence we inflict upon our own people as Annie Proulx did in stories like Brokeback Mountain, Mahasweta Devi did with Hazaar Chauraasi ki Maa, as Namdeo Dhasal did with his poetry.
There are few rewards for this. But one reward is acknowledgement and regard from one's own community, or from other people elsewhere in the world. People look up to writers even if they don't read much.
So, this is the second question to ask - why care what a writer says or does?
We care because writers give to a people their voice, their memory, and multiple layers of truth. Even if we do not see our exact selves mirrored in a book or a poem, we still find a part of our collective self. Writers show us a secret tunnel into the lives and minds of people we do not agree with. They incite passion and compassion, debates and dreams, and all the warnings we need. They consider fresh possibilities. They help us confront our fears, failures, shame, pleasure, and the ways in which we have been damaged. They are a nation's conversation with itself.
Literature is the soul of a people. This is why there is such anxiety about what is being written and read. This is also why we give writers awards - to make our "recognition" public. To have a Sahitya Akademi and to give a prize is a way of saying: You speak of India. Perhaps you do not speak for rulers, or a caste or class. We may find it upsetting. But we have heard through you the voice of our own people. We recognise this, we honour this.
For exactly the same reason, writers return awards and resign from public institutions like the Sahitya Akademi. It is a writer's way of saying: Think! Think of injustices in the past and present. Think about right and wrong. You cannot honour me while dishonouring the values of this country. And if I can communicate nothing else, let me at least say this - not in my name.
Awarded writers and those who work for public institutions do not stop criticising their social and cultural environment. If they did, the award or the institution itself would cease to have any meaning. It would be a badge of cowardice and corruption rather than an honour.
Writers who return awards, writers who go to jail rather than comply with authoritarian governments, writers who are exiled, writers who are killed, writers who declare themselves dead - all of them are doing their work. They are speaking. Perhaps speaking for the least powerful among us, perhaps speaking only for themselves. But they speak in grief, trusting in the goodness of their people. As Dushyant Kumar had written:
Thus may all writers speak, in all languages. Their voices will be heard most sharply in places where the silence is loudest.