The genesis of the Indira Awaas Yojana (IAY) can be traced back to the programmes of rural employment began in early 1980s. Construction of houses was one of the major activities under the National Rural Employment Programme (NREP), 1980 and the Rural Landless Employment Guarantee Programme (RLEGP), 1983. There was, however, no uniform policy for rural housing in the states. For instance some states permitted only part of the construction cost to be borne from NREP/ RLEGP funds and the balance was to be met by beneficiaries from their savings or loans obtained by them. On the other hand, others permitted the entire expenditure to be borne from NREP/ RLEGP funds. Further, while some states allowed construction of only new dwellings, others permitted renovation of existing houses of beneficiaries. As per announcement made by the Government of India in June 1985, a part of the RLEGP fund was earmarked for the construction of houses for SCs/STs and freed bonded labourers. As a result, Indira Awaas Yojana (IAY) was launched during 1985-86 as a sub-scheme of RLEGP. IAY thereafter continued as a sub-scheme of Jawahar Rozgar Yojana (JRY) since its launching in April, 1989. 6% of the total JRY funds were allocated for implementation of IAY. From the year 1993-94, the scope of lAY was extended to cover below poverty line (BPL) Non Scheduled Castes/ Scheduled Tribes families in the rural areas. Simultaneously, the allocation of funds for implementing the scheme was raised from 6% to 10% of the total resources available under JRY at the national level, subject to the condition that the benefits to Non-Scheduled Castes/ Scheduled Tribes poor should not exceed 4% of the total JRY allocation. IAY was de-linked from JRY and made an independent scheme with effect from 1st January 1996.

IAY is a cash subsidy based programme, under which assistance is provided to rural BPL families for constructing dwelling units on their own using their own design and technology.  Selection of IAY beneficiaries is carried out by Gram Sabhas. 60% of the funds provided under IAY are meant for SC and ST beneficiaries and the subsidy is sanctioned either in the name of the female member of the household or jointly in the names of both spouses. The present per unit assistance is Rs. 35,000 in plain areas and Rs. 37,500 in hilly and difficult areas. Funding under IAY is provided by the Centre and the State in the ratio of 75:25. However, In the case of Union Territories, the entire funds under this Scheme are provided by the Government of India.

Public Sector Banks were advised to include IAY houses under the Differential Rate of Interest (DRI) Scheme and lend upto Rs. 20,000 per unit at an interest rate of 4 per cent per annum.

For more information about the Scheme, we recommend to visit the following link: