With a view to meeting the housing needs of the rural poor, Indira Awaas Yojana (IAY) was launched in May 1985 as a sub-scheme of Jawahar Rozgar Yojana. It is being implemented as an independent scheme since 1 January 1996. The Indira Awaas Yojana aims at helping rural people below the poverty-line belonging to SCs/STs, freed bonded labourers and non-SC/ST categories in construction of dwelling units and up gradation of existing unserviceable kutcha houses by providing grant-in-aid. From 1995-96, the IAY benefits have been extended to widows or next-of-kin of defence personnel killed in action. Benefits have also been extended to ex-servicemen and retired members of the paramilitary forces as long as they fulfill the normal eligibility conditions of Indira Awaas Yojana.

               Under the scheme allotment of the house is done in the name of the female member of the households or in the joint names of husband and wife. A minimum of 60 % of funds are to be utilized for construction of houses for the SC/ST people. Further, 60% of the IAY allocation is meant for benefiting SC/ST families, 3% for physically handicapped and 15% for minorities. 5% of the central allocation can be utilized for meeting exigencies arising out of natural calamities and other emergent situations like riot, arson, fire, rehabilitation etc.

                           Assistance for construction of new house is provided at the rate of Rs. 45000/-and Rs. 48,500/- per unit in the plain and hilly/ difficult areas respectively. IAY houses have also been included under the differential rate of interest (DRI) scheme for lending by Nationalized Banks  upto Rs.20,000/- per unit at an interest rate of 4% in addition to financial assistance provided under IAY.

               Selection of beneficiaries under IAY is done from the permanent IAY waitlist prepared out of the BPL Lists and approved by the Gram Sabha.  Selection of construction technology, materials and design is left entirely to the choice of beneficiaries. Sanitary latrine and smokeless chulha are integral to an IAY house.  For construction of  sanitary latrine, the beneficiary can avail of the existing assistance from the Total Sanitation Campaign (TSC) Funds, in addition to the financial assistance provided under Indira Awaas Yojana

  IAY is  a scheme channeled through Panchayati Raj and the Panchayati Raj Institutions(PRIs) are centric to implementation of IAY scheme. The role of PRI in implementation of the scheme are:-

 ·        The Zilla Parishad/ DRDAs on the basis of allocation made and targets fixed decide  the number of houses to be constructed/upgraded Panchayat-wise

·        The ZP/DRDAs intimate the same to Gram Panchayats. Thereafter, beneficiaries are selected from the Permanent Waitlist approved by the Gram Sabha as per guidelines/priorities fixed restricting the number to the targets fixed

·        A list is sent to the Panchayat Samiti for information and records

      The activities undertaken at Panchayat level are as below:- 

·                    Timely selection of beneficiaries

·                    Transparency in selection of beneficiaries

·                    Timely payment of financial assistance to the selected beneficiaries & Monitoring of progress of house construction.

·                    Display of BPL/IAY waitlist in a public place

                   In order to introduce transparency in selection of beneficiaries permanent IAY waitlists have to be prepared gram panchayat wise by the States/UTs.  These lists contain the name of deserving BPL families who need IAY houses in order of their poverty status based on the latest  BPL list .

                    IAY has been converged with Rajiv Gandhi Grameen Vidyutikaran Yojana under which one free electricity connection is provided. Similarly, the Scheme has been converged with Total Sanitation Campaign (TSC) Funds for providing financial assistance for construction of a sanitary latrine alongwith the IAY house. Convergence is encouraged with insurance scheme like Aam Admin Bima Yojana and Janshree Bima Yojana .

                    Efforts are on to converge with other schemes of the Ministry of Rural Development namely, Swarana Jayanti Gram Swarojgar Yojana (SGSY), National Rural Employment Guarantee Scheme (NREGS), Accelerated Rural Water Supply Programme (ARWSP) .

                  Convergence of IAY is also envisaged with schemes of other Ministries such as those of Ministry of Panchayat Raj, Ministry of New and Renewable Energy Sources for Smokeless Chullahs and solar lighting, bio-gas and clean fuel, Ministry of Labour for enrollment under health insurance scheme, Ministry of Environment and Forest for provision of kitchen garden and fruit-bearing trees etc.

                   Since inception in 1985, 212.95 lakh houses have been constructed with funding of Rs.52927.26 crore.  A total of 71.75 lakh house (120%) were constructed under I phase of Bharat Nirman (2005-2009) (up Sept 09).

              The Central allocation for IAY during 2008-09 was Rs 8800 crore  which includes Rs. 3050 crore  provided as part of economic stimulus package released at the end of the year 2008-09. In 2008-09, 21.32 lakh house (100.32%) were constructed as against target of 21.21 lakh house.

                        The Central allocation for the current Financial Year i.e 2009-10 is Rs. 8800.00 crore. This year amount plus the amount of released as stimulus package at the end of 2008-09 will enable construction of 40.52 lakh houses, which is the target for the year 2009-10.

                      For the current year 2009-10 till now Rs. 4058.37 crore  have been released as  Ist installment to 585 districts out of the llocation of 8800 crore. Progress Report of the Scheme is available online.

Further, a Task Force was constituted under the Chairpersonship of Joint Secretary (Rural Housing) by the Ministry of Rural Development for examining various issues relating to construction of IAY houses particularly relating to improving  the quality of IAY houses and to understand the best practices followed across the States in the implementation of IAY.  The recommendations of the Task Force are as below:

  Design & quality of the House

 1.1              Efforts should be made to ensure that the IAY house is a pucca one with permanent walls and permanent roofing.  The permanent nature of the walls and roofing shall be determined in a manner such that the house:

(i)                is able to withstand the weather conditions of the place throughout the year

(ii)              has minimum level of disaster resistant technology to be able to withstand minor earthquakes, cyclone, floods etc.

(iii)            has walls that are plastered at least externally to ensure durability.

 1.2              It is also desirable that the IAY house have:

(i)                Adequate space for pursuing livelihood activities;

(ii)              A verandah;

(iii)            Stair case to go to the top of the house;

(iv)            Rain water harvesting system

1.3              Each State Government is required to finalise type designs for the IAY house along with technical and material specifications based on the above principles.   It is not necessary to have only one type design and one state can adopt more than one type designs depending upon local conditions.  The type designs once finalized by the State Government will be required to be communicated to the Central Government for information and record.

1.4              It is essential that for all the type designs approved by the State Government, the State Government takes responsibility and trains sufficient number of masons and other mechanics for execution of the house as per the type designs.  Similarly, the State Government shall also have a programme to ensure that sufficient tools and materials required for construction of the houses as per type design like centering material etc. are available in each district for execution of the IAY houses.  The systematic education programme shall not only train the masons but also the beneficiaries. 

2.     Spatial spread of the programme

 2.1              As far as possible, the States shall follow the cluster approach to facilitate better supervision, convergence of schemes ad economies in purchase.  For this purpose, all the villages in a district/block may be divided into three groups and each group of villages may be provided funds every year.  In this way, all the villages will be covered in three years.  Thereafter first group of villages may again be taken up in the fourth year if there is still housing shortage, and so on. 

3.     Unit cost

 3.1              As soon as the beneficiary is finalized under IAY for sanction by the District Collector/DM/DC, on the consent of the beneficiary, a application form will be filled up simultaneously by the DRDA/concerned implementing agency for loan under DRI Scheme.  All IAY applications for loan facility under DRI Scheme shall be forwarded to the concerned service area bank.  The concerned bank should be given a time limit of (30 days) to accept the application or reject the application, giving reasons.  The access to DRI scheme should be appropriately reviewed in DLCC/BLCC and separately by the DRDA and District Collector for necessary action. 

4.     Basic amenities

 4.1              In addition to providing sanitary latrine in every house by dovetailing funds from Total Sanitation Campaign (TSC), IAY scheme should also have convergence with DWS for providing drinking water, with Rajiv Gandhi Gramin Vidyutikaran Yojana for providing free electricity connection, with Insurance companies  for Jan Shree/Aam Admi Bima and beneficiaries should be encouraged to use clean fuel as well as have kitchen gardens.

5.     Release of Funds 

5.1              The funds should be released either in two or three instalments.  Ideally, the funds should be distributed to the beneficiaries in two instalments, first instalment with  the  sanction order and the second instalment when  the construction reaches the lintel level.  It is critical that each State Government clearly define the stage-wise payment system along with the system to be in place for verification of the stage of construction.   Each State Government may operationalize a computerized information system for recording of the stage of construction and the release of funds. 

6.     Technical Supervision, Monitoring and Transparency

            6.1              Technical supervision shall be provided at least at the foundation and the roof laying stages.

6.2             The Government of India has already entrusted the responsibility of developing computerized information system which will enable not only monitoring of the timely execution of the work but also the stage-wise progress and disbursement of funds.  The State Governments shall operationalize the software as soon as it is developed. 

6.3             In addition, it is suggested that to deal with complaints, an effective complaint Monitoring System with adequate staff should be set up at the state level which can visit, independent of the regular execution wing and give a report to the implementing agencies about the short-comings/shortfalls, for effective redressal.

6.4             System of social auditing of the Scheme shall be introduced by the State Governments.



               The Credit-Cum-Subsidy Scheme for Rural Housing was launched w.e.f. 1.4.1999. The Scheme targets rural families having annual income upto Rs. 32,000/- While subsidy is restricted to Rs.12,500/- the maximum loan amount that can be availed is Rs. 50,000/- The subsidy portion is shared by the Centre and the state in 75:25 ratio. The loan portion is to be disbursed by the commercial banks, housing finance institutions etc.

            From the year 2002-2003, the Central allocation under IAY/CCSS has been combined and  no separate allocation and target are made to the Scheme and option is given to the States /districts to utilize the funds under the Scheme from IAY. Upto 20% of the IAY funds earmarked for upgradation could be utilized for implementation of this Scheme also.


 This scheme has been discontinued  with effect from 1.4.2004 


 This Scheme has been discontinued with effect from  1.4.2004


              A Scheme for  incentivising the State Governments for providing homestead sites to the rural BPL households as part of Indira Awaas Yojana (IAY) has been rolled out.  The main objective of this Scheme is to provide  homestead sites to those rural BPL households who do not have either agricultural land or a plot of land to construct a house. All States/UTs have been asked to submit proposal to get funds for this scheme.

 The Basic parameters for providing homestead sites to the rural BPL households as part of IAY are given below:

 (i)          For the purpose of allotting homestead sites, the beneficiaries will be selected only from the Permanent IAY Waitlists as per their priority in the list.  Only those BPL households who have neither land nor housesite, will be eligible.

 (ii)        In the first instance, the State Government will regularize the land as a homestead site if it is presently occupied by a BPL household and if regularization is permissible as per the existing acts and rules.

 (iii)      If this is not the case, State Government will allot suitable Government land as  homestead site to the eligible BPL household.  The Government land includes community land (gocher etc.), land belonging to panchayats or other local authorities.

 (iv)  In case suitable Government land is not available for allotment as homestead sites, private land may be purchased or acquired for this purpose.

 (v)     However, before taking up land purchase or land acquisition, competent authority will certify that it was not possible to regularize occupied land, if any or that there is no suitable government land for allotment as homestead sites.

 (vi)      Financial assistance of Rs. 10,000/- per beneficiary or actual, whichever is less, will be provided for purchase/acquisition of a homestead site of an area around 100-250

 (vii)    Funding will be shared by Centre and States in the ratio of 50:50   while in the case of UTs Central Government will fund 100%.

 (viii)  If the amount per beneficiary falls short, the balance amount will be contributed by the State Government.

 (ix)  First instalment of the funds will be released only after the State certifies that it has no land to provide to the rural BPL either through regularization or through transfer and that it has identified the land meant for acquisition /purchase.  Subsequent installments would be released when the States take possession of the land.

 (x)        BPL families allotted land through purchase would be, to the extent feasible, provided house construction assistance in the same year.

 (xi)   The State Governments will be incentivised by allocating additional funds under IAY to the extent beneficiaries are provided with homestead site by way of regularization, allotment or purchase/acquisition.  If necessary, a provision will be made in the guidelines to keep a portion of  IAY funds apart for incentivising the States.  The unspent amount, if any, out of this component will be distributed to the better performing districts.

 (xii)    The States will be expected to provide funds for the proposed scheme over and above their existing budget for similar initiatives. This is also subject to the condition that the States should continue to budget for the Scheme an amount not less than their previous year’s budget.