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Tata Capital > Blog > Loan for Home > Rajiv Awas Yojana: Objective, Eligibility And Benefits

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Rajiv Awas Yojana: Objective, Eligibility And Benefits

Rajiv Awas Yojana: Objective, Eligibility And Benefits

A vision, a ray of light to see India as a "Slum-free India", a project under the Ministry of Housing and Urban Poverty Alleviation (MoHUA) was launched. 

In pursuance of this vision, this aspirational project was named Rajiv Awas Yojana or RAY, focusing on slum dwellers and the urban poor, commonly known as Rajiv Housing Scheme. It was launched in 2011 in two phases. The period from 2011- to 2013 was the preparatory stage. 

After the approval of the Central Government, the implementation stage commenced, making India a slum-free country by 2022.

Objectives of RAY

The main aim/ mission of the Rajiv Awas Yojana scheme is to stimulate India's states/union territories to bring all slums, notified or non-notified, under the umbrella of the formal system. 

All slums get pucca houses with basic and quality living amenities like housing, civic infrastructure, social amenities, etc., vis a vis other area in the State or the Union Territories of India. 

The following are the definitive objectives that RAY aimed to achieve:

  1. Providing basic and affordable housing facilities with all amenities in civic, infrastructure, and social arrangements to the slum areas to help curb the growth of slums.
  2. Facilitate the Urban poor with financial schemes and banking institutions to support them with affordable credit linkages.
  3. To create basic facilities like water supply, approach roads, drainage system, medical, sewerage, electricity, street lighting, etc. for the slum area
  4. To reform any bills that will help address the reasons for slum creation and its problems.
  5. To provide skill sets of the Urban poor by providing skill development reform programs to increase employability and income.
  6. Allowing equal participation at every decision-making stage empowers the slum dwellers by strengthening and nurturing Slum Dwellers Associations/ Federations, thus reducing the societal marginalisation.
  7. The Rajiv Awas Yojana for the slum dwellers will help in lifestyle upliftment and thus reduce the further increase in slums through the collaborative activities by the government and the Urban poor.

Eligibility for Rajiv Gandhi Awas Yojana schemes:

The minimum size of the project should be two hundred and fifty urban dwellings to come under the scheme of Rajiv Awas Yojana. 

Rajiv Awas Yojana is categorised into the following categories based on the funding patterns. Different categories have different permission grants for their various activities, mainly based on government funding patterns. 

It is categorised into three parts- categories A, B, and C, which are the eligibility criteria.

  • Category A: it comprises people living in urban areas with a population of 5 lakh or more per Dwelling Unit (DU) and gets an upper limit funding of Rupees Five Lakh
  • Category B: it comprises people living in urban areas with a population below 5 lakh per Dwelling Unit (DU) and gets funding of Rupees Four Lakh
  • Category C: comprises people living in urban areas of special category states (like Jammu & Kashmir, Himachal Pradesh, and Uttrakhand) and the North-eastern States. It gets fixed funding of Rupees Five Lakh irrespective of the city's population

The benefits of Rajiv Awas Yojana:

  1. This scheme provides financial grants to the Government agencies (States/ UTs, Urban Local Bodies / Central Government) to implement the Rajiv Awas Yojana scheme in their states/ Union territories.
  2. Under this scheme, financial aid is offered to create affordable housing complexes.
  3. Under the Affordable Housing in Partnership (AHP), the Centre government provides monetary aid of Rs. 75000 each for the Economically Weaker Section (EWS)/Low-income Group (LIG) for 21 to 40 sq. mt. Housing units.
  4. Rajiv Awas Yojana allows employment by providing skill development reforms/programs to uplift their standard of living.
  5. This helps get a better salary for people living in slums and will eventually reduce poverty.

Credit Schemes under Rajiv Awas Yojana:

For the easy flow of credit from the banks and financial institutions to the slum dwellers for housing, few provisions were taken to improve access to credit for EWS/LIG. 

They are:

  • Rajiv Rinn Yojana (RRY) - this is an additional instrument scheme of Rajiv Awas Yojana for tackling the housing needs for the EWS/LIG community in the Urban sector. It provides an interest subsidy of 5% for any long-tenure loans of 15yrs to 20yrs. The revised loan amount is Rs. 5 lakhs for EWS and Rs. 8 lakhs for LIG beneficiaries. This helps in cheaper housing loan schemes for EWS and LIG urban dwellers.
  • Credit Risk Guarantee Fund - this fund is maintained and operated by National Housing Bank, which guarantees the lending agencies for the loans taken. It gives guaranteed coverage of up to 85% of the loan from Rs. 2 lakhs to Rs. 5 lakhs. And 90% coverage of the loan amount of up to Rs.2 lakh. 

Rajiv Awas Yojana was introduced in 2011 to help slum dwellers, and urban poor provide affordable housing and a living environment with the strong aim of eradicating slums. 

This envisions of slum-free India is for the betterment of the slum dwellers and is now known as Pradhan Mantri Awas Yojana.

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