Background
Urbanisation: The process through which an increasing proportion of the population lives in urban areas, accompanied by structural transformation from agriculture towards industry and services.
Urban-rural continuum: Urbanisation is no longer confined to municipal boundaries. It increasingly extends into surrounding villages, census towns, industrial corridors and peri-urban settlements.
Peri-urban areas: Transitional areas located at the interface of rural and urban settlements, characterised by rapid population growth, changing land use and increasing non-agricultural economic activity
Urban Classification in India
Statutory Towns
Areas notified as urban by State governments.
Include Municipal Corporations, Municipal Councils, Cantonment Boards and Notified Town Area Committees.
Census Towns
Population of at least 5,000.
Population density of at least 400 persons per sq. km.
At least 75% of male main workers engaged in non-agricultural activities.
India's Changing Urban Landscape
India had approximately 377 million urban residents across 8,000 cities and towns in 2011.
Since then, States have notified approximately 1,000 additional statutory towns.
According to UN estimates cited in the article, 44% of Indians currently live in urban areas.
India's urban population is projected to cross 720 million by 2050.
Around 94% of urban settlements are small towns.
Nearly 60% of the urban population lives in Class I cities.
Peri-urban areas are growing at approximately 4.15% annually, compared with 2.9% growth within administrative city boundaries.
The Economic Survey 2025–26 cited satellite-based estimates suggesting that India was already 63% urban in functional terms in 2015.
Constitutional Framework of Urban Governance | Existing Policy Developments |
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What would a National Urbanisation Policy change?
Shared principles, not a blueprint: The policy would align existing institutions to common principles, grounded in subsidiarity: each task goes to the lowest level able to do it.
Seven systems transformations: The report, ‘Equitable, Productive, Low-carbon and Resilient System of Cities in India’, proposes seven:
Standardise the definition and classification of statutory urban settlements;
Modernise spatial and regional planning;
Redirect public and private finance towards urbanisation;
Build layered coordination between levels of government, anchored by a National Urbanisation Council;
Plan sector reforms around functional units such as the airshed, river basin and city region;
Make reform politically rewarding for urban leaders;
Support knowledge exchange and local innovation.
Foundational three: Classification, planning and finance come first, since an unclassified settlement cannot receive municipal services.
Challenges
Thin municipal revenue: Municipal revenue is about 1% of gross domestic product (GDP), against 7.4% in Brazil.
Unpredictable transfers: Piecemeal, scheme-specific transfers leave cities unable to predict cash flow.
Planning committees without force: Metropolitan and District Planning Committees under Articles 243ZE and 243ZD have existed for three decades, but their guidance is not binding.
Mismatched jurisdictions: About 65% of Delhi’s fine-particle pollution (PM2.5) originates outside the city, so no municipal air plan can succeed alone.
Way Forward
Periodic status review: Review settlement status at fixed intervals using satellite data on built-up growth and economic activity.
Regional planning below metros: Extend regional planning to cities under one million and mandate zoning of the urban fringe.
Formula-based finance: Make own revenue and formula-based transfers the fiscal pillars, paying untied grants (spent as cities choose) directly to municipalities.
Conclusion
Urbanisation in India cannot be perceived only in terms of territorial expansion of urban units but as a structural transition. A National Urbanisation Policy will act as a vehicle to bridge the rural-urban divide through integrated planning, empowered local government, financing and cooperative federalism. Transitioning from administrative region-based governance to functional region-based planning will enable the creation of Viksit Bharat 2047.
