The 'Raja Rao Award for Literature' was created in Rao's honor, and with his permission, in the year 2000. It was established "to recognize writers and scholars who have made an out standing contribution to the Literature and Culture of the South Asian Diaspora." The award was administered by the Samvad India Foundation, a nonprofit charitable trust named for the Sanskrit word for dialogue, which was established by Makarand Paranjape of Jawaharlal Nehru University in New Delhi to bestow the award and to promote education and cultural contributions to India and the South Asian diaspora. No cash prize was attached to the award during its existence. The Award was bestowed seven times between 2000 and 2009.