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. It has been decided that the focused 35 Left Wing Extremism (LWE) affected districts will be treated as difficult areas and the higher rate of unit assistance of Rs.48,500 for construction of IAY houses in these 35 districts will be provided. 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:-

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

2. 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.

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

The activities undertaken at Panchayat level are as below:-

1. Timely selection of beneficiaries.

2. Transparency in selection of beneficiaries.

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

4. 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 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).

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 Financial Year i.e 2009-10 was Rs. 8800.00 crore. This amount plus the amount of released as stimulus package at the end of 2008-09 will enable construction of 40.52 lakh houses, which was the target for the year 2009-10. Against this target 33.86 lakh houses were constructed.

For the current year 2010-11, the central allocation is Rs.10053.70 crore, for construction of 29.09 lakh houses.

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.