In July, Ramanunni had received an anonymous threat letter warning him that his right arm and left leg would be chopped off if he did not convert to Islam within six months.
The award, announced on Thursday for his novel Daivathinte Pusthankam (The book of God), is a vindication of his stand on secularism and religious harmony, Ramanunni said.
"It is more than just a coincidence for me... and I am so happy that I got this honour not too long after receiving the threat letter," Ramanunni told PTI over phone.
Ramanunni had lodged a police complaint after receiving the letter in which the extremists had alleged that he was 'misleading' Muslim youth through some of his articles.
Ramanunni said many people had warned him not to write a book with the Prophet as its central character as it might invite the wrath of fundamentalists.
"The extremists may think, who am I to write on their Prophet. But, many genuine and secular Muslims have called me from various places and thanked me for portraying Prophet Muhammad in a such a good manner at a time when he is shown in a poor light by many," he said.
The 700-page novel is a blend of religion, history, and science with Prophet Muhammad and Lord Krishna as its central characters.
Jesus Christ, Mahatama Gandhi, Karl Marx and Hitler also appear in the book.
"The book shares the dream of a beautiful world where people live together, setting aside their differences," he said.
A novelist and short story writer, Ramanunni is a recipient of the Kerala Sahitya Akademi award and Vayalar award among other literary honours.
A film was also made on his debut novel Sufi Paranja Katha, which revolved around the love story of a Muslim man and a Hindu woman.
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