Karthiga

Published on: Jun 24, 2026

Understanding the IAY Scheme: Key Insights

Indira Awaas Yojana (IAY) is a sub-scheme of Rural Landless Employment Guarantee Programme (RLEGP) which was launched by the Ministry of Rural Development. The main objective of the Indira Awaas Yojana is to provide a grant for the construction of houses to members of Scheduled Caste (SC)/Scheduled Tribes (ST), freed bonded labours and to non-SC/ST category below the poverty line. In this article, we look at the Indira Awaas Yojana (IAY) in detail. Also, read about Pradhan Mantri Awas Yojana (PMAY).

Objectives

The objectives of the Indira Awaas Yojana are listed below:

To provide support during the construction of houses in rural areas.
To support the construction of houses with adequate provisions, including workplaces within the house.
To design the houses based on the requirements of the dweller.
To promote the use of technology and material that is affordable, conductive for generating employment, environment-friendly and sustainable.
To empower and encourage Panchayats to take a lead role at the village level for the implementation of this housing scheme.

Salient Features

The salient features of the Indira Awaas Yojana (IAY) are as follows:

Joint Ownership

The houses provided under the Indira Awaas Yojana (IAY) will be under the joint ownership of the husband and wife, except in the of the case of an unmarried, widow or divorced individual.

Construction

The construction of the houses should be carried out by the beneficiary. The contractors should not be involved in the construction of houses under IAY. If the beneficiary has assigned a contractor, then the State Government will withdraw the funds used on the same.

Technical Support

The support in the form of technical and managerial guidance is provided for the construction of the IAY house. Also, the services of reputed NGOs, charitable organisations, youth clubs can be utilised to provide necessary service support to the beneficiaries.

Design and Construction Standards

The eco-friendly housing techniques are promoted by the State Government to improvise houses with the facilities such as water supply, internal and approach roads, sewerage, drainage, street lighting and social infrastructure amenities in slums.

Target Group

The target group covers households that are Below Poverty Line (BPL) as identified by the Gram Sabha of a village. The Central Government will extend its assistance to the households headed by women, SC/ST individuals, non-SC/ST rural households below the poverty line, ex-servicemen, widows, disabled individual, freed bonded labourers and marginalised sections of society.

Special Projects by IAY

Under Indira Awaas Yojana (IAY), the Central Government will provide funds for special projects initiated for the following purposes are:

Rehabilitation of rural families below the poverty line.
To Provide settlement for liberated manual scavengers and freed bonded labourers.
To provide a settlement for vulnerable tribal socities.
Rehabilitation of individuals who are affected by occupational diseases.
Settlement of families who are covered under the Scheduled Tribes and other Traditional Forest Dwellers Act.
Settlement of families who are required to relocate from districts.
Demonstration of new technology with a focus on affordable and eco-friendly technologies.

Funding and Allocation of Funds

The funds released to the beneficiaries would be shared by the State and Central Government, the ratio of price sharing would be in the ratio of 75:25, with the exclusion of projects in the North-East regions and Union Territories. So, the Central Government is responsible for providing 90% fund for the projects in the North-East regions and Union Territories. The funds allocated by the State and Central Government for the beneficiaries except in the north-east regions/UT are tabulated below:

S. No	Beneficiary Category	Fund Allocated
1.	SC/ST Category	60%
2.	Minority sections of society	15%
3.	Individual with disabilities	3%

Note: If any of the beneficiaries do not fall under the category mentioned above, then the District Collector or Zilla Parishad should certify the same and make necessary changes in the official portal (Awaas Soft). The allocation of funds made are as follows:

To the extent of 90% of the fund allocated under this scheme will be used for the purchase of items for new houses, upgradation of houses and also for other expenses.
The balance 5% of the fund will be used for the special projects undertaken by the Indira Awaas Yojana (IAY).

The Ministry of Rural Development will allocate the funds based on the following conditions:

The priority is given to the housing shortage in rural regions and the next priority is given to the individuals of the Below Poverty Line category (BPL).
The assistance of 20% can be utilised for the upgradation of kutcha houses for the families that are BPL category.

Implementation of the Scheme

The Zila Parishad in the district level is responsible for the implementation of the scheme and in case of no Zila Parishad in the State, then the concerned authority equivalent to the same should take over the responsibility.
However, at the local level, the Village Panchayats are responsible for the implementation of guidelines set under the Indira Awaas Yojana (IAY). If there is an absence of Village Panchayat in a State, then the concerned authority which is equivalent to the same is responsible. In case the Village Panchayats is not capable of undertaking the task, then the State Government can hand over the intermediate level responsibility to the Panchayat.

Empowered Committee

The Empowered Committee consists of the ChairPerson will be the secretary of rural development or additional secretary of rural development. Also, it will consist of the members such as joint secretary of rural housing, HUDCO representative, an adviser from the planning commission, knowledge network representative, representatives from NGOs related to the field of construction and the state secretary of rural housing. This committee will make decisions related to the scheme such as new house construction targets, permission for cash payments, reallocation of funds, the sanction of special projects, approval of new technologies for construction and monitoring the scheme.

Construction Timelimit

The prescribed time limit for the completion of the project are given below:

S. No	Level of Construction	Timelimit
1.	First Stage (Initial level of Construction)	9 months from the day of receipt of 1st instalment
2.	Second Stage (Completion of the project)	9 months from the day of receipt of 2nd instalment.

Release of Fund

The annual allocation of the fund will be released in two instalments.
The first instalment of 25% of the project cost is provided along with the sanction letter.
The second instalment of 60% of the project cost is released upon reaching the level of the lintel, and the final instalment of 15% of the project cost is released to the beneficiary on completion of the project.

Procedure for Release of 1st Instalment

The first instalment would be released to those who have taken 2nd instalments in the previous year.
The Districts who have not received the 2nd instalment of the previous year is required to submit the proposals for 1st instalment along with the documents which are necessary for the release of 2nd instalment of the previous year.

Procedure for Release of 2nd Instalment

The fund will be released under the following conditions:

To the extent of 60% of the fund is utilised during the financial year.
Proof for completion of 100% of sanctioned houses within three years from the date of approval is required.
In the case of two years, proof for completion of 75% of sanctioned houses has to be obtained.

Payment to Beneficiaries

The payment to the beneficiaries is made through the Post office or Bank account. The details such as radar number, account number of the beneficiary have to be registered into the portal to transfer the credit directly using the e-FMS module. All payments made to the beneficiaries will be reflected in the portal to track the status of expenditure and balance at the District level.

Monitoring

The systematic monitoring system is undertaken by the concerned authorities of Indira Awaas Yojana. As a part of this monitoring system, monthly reviews and annual reports has to be submitted to the area officers of the region will visit the allotted states and UT to monitor whether the scheme is being functioned as per the exact guidelines of the programme.

Back to Learn

Frequently Asked Questions

Common questions about Indira Awaas Yojana Key Insights and Features.

The primary objective of the Indira Awaas Yojana is to provide financial assistance in the form of grants for the construction of houses to members of Scheduled Castes (SC), Scheduled Tribes (ST), freed bonded labourers, and non-SC/ST individuals below the poverty line in rural areas.

The target group for the Indira Awaas Yojana includes households that are identified as Below Poverty Line (BPL) by the Gram Sabha of a village. Priority is given to households headed by women, SC/ST individuals, non-SC/ST rural households below the poverty line, ex-servicemen, widows, disabled individuals, freed bonded labourers, and marginalized sections of society.

The funds for the Indira Awaas Yojana are shared by the Central and State Governments in a ratio of 75:25, except for projects in the North-East regions and Union Territories, where the Central Government provides 90% of the funding.

Some key features of the Indira Awaas Yojana include joint ownership of houses by husband and wife, construction to be carried out by the beneficiary without involvement of contractors, technical and managerial guidance provided, promotion of eco-friendly housing techniques, and involvement of NGOs and other organizations for service support.

The time limit for the completion of the IAY housing project is divided into two stages: the first stage (initial level of construction) should be completed within 9 months of receiving the first instalment, and the second stage (completion of the project) should be completed within 9 months of receiving the second instalment.

The annual allocation of funds for the Indira Awaas Yojana is released in two instalments. The first instalment of 25% of the project cost is provided along with the sanction letter, the second instalment of 60% is released upon reaching the lintel level, and the final instalment of 15% is released upon completion of the project.

The Empowered Committee, headed by the Secretary or Additional Secretary of Rural Development, is responsible for making decisions related to the Indira Awaas Yojana, such as setting new house construction targets, permitting cash payments, reallocating funds, sanctioning special projects, approving new construction technologies, and monitoring the scheme's implementation.

The Indira Awaas Yojana provides funds for special projects initiated for the rehabilitation of rural families below the poverty line, settlement of liberated manual scavengers and freed bonded labourers, vulnerable tribal societies, individuals affected by occupational diseases, families covered under the Scheduled Tribes and other Traditional Forest Dwellers Act, families required to relocate from districts, and demonstration of new affordable and eco-friendly construction technologies.

The implementation of the Indira Awaas Yojana is monitored through a systematic system that involves monthly reviews and annual reports submitted to the area officers of the region. Additionally, these officers visit the allotted states and Union Territories to ensure the scheme's proper functioning as per the guidelines.

At the local level, Village Panchayats are responsible for the implementation of the guidelines set under the Indira Awaas Yojana. In the absence of Village Panchayats, the concerned authority equivalent to the same takes over the responsibility. In cases where Village Panchayats are not capable of undertaking the task, the State Government can assign the intermediate-level responsibility to the Panchayat.