Need for a unified urbanisation plan

Why in news?

Census 2027 will retain 2011 urban definitions though India is far more urban; experts seek a National Urbanisation Policy.

UPSC Relevance 

Prelims – Census town, statutory town, Article 243Q. 

Mains – GS1, Urbanization, their problems and their remedies; Population and associated issues

GS3, Infrastructure; Mobilization of resources; Inclusive growth

What counts as ‘urban’ in India? 

India does not have one definition of ‘urban’. There is a legal (administrative) definition used by States and a statistical definition used by the Census. Both decide who gets urban planning, funds and services.

1. Legal definition – Statutory Town

• Article 243Q(2) – The Governor notifies an area as a ‘transitional area’ (Nagar Panchayat), ‘smaller urban area’ (Municipal Council) or ‘larger urban area’ (Municipal Corporation).
• Factors to be considered – Population, density, revenue generated for local administration, share of employment in non-agricultural activities, economic importance, or other factors the Governor deems fit.
• The gap – The Constitution gives only broad factors, not fixed thresholds. States are not required to publish reasons. So the decision is discretionary and politically reversible.
• Extreme variation – Greater Mumbai had nearly 1.2 crore residents in 2011, while the statutory town of Gangotri Nagar Panchayat (Uttarakhand) has just 110 people. Both are ‘urban’.

2. Statistical definition – Census Town (unchanged since 1981)

• Three criteria together – Population of at least 5,000; density of at least 400 persons per sq km; at least 75% of male main workers in non-agricultural work.
• Status – Defined by the Registrar General of India for data purposes. It is still governed as a village by a Gram Panchayat.
• Census 2027 – Will use the same 2011 criteria. This keeps data comparable across Census years, but measures urban India with an outdated yardstick.
• MoHUA – Told a parliamentary committee that the four-decade-old census town criteria cannot capture the real scale of urbanisation.

Measurement debate : Different statistics

• Census 2011 – 37.7 crore urban people (about 31%) in nearly 8,000 cities and towns. Since then, States have notified about 1,000 more statutory towns.
• United Nations – Estimates 44% of Indians live in urban areas today; urban population to cross 72 crore by 2050.
• Economic Survey 2026 – India is far more urban in functional terms; satellite data placed the country at 63% urban in 2015.
• Peri-urban growth – Areas around cities are growing at about 4.15% a year, against 2.9% within city boundaries. The fastest growth is happening where official ‘urban’ status does not exist.

Why classification matters

In India, being classified as ‘urban’ is a gateway. Master plans, municipal finance, Finance Commission grants, building rules, environmental clearances and scheme eligibility all depend on it.

• Denied urbanisation – Bhiwandi near Mumbai spans 60 villages and nine census towns. About 91.8% of jobs are non-agricultural, yet it is governed as rural; Panchayats handle land use, waste, water and air quality without mandate or technical capacity.
• Lumping of very different cities together – About 94% of urban settlements are small towns, while about 60% of the urban population lives in Class I cities. Class I includes megacities like Mumbai and Delhi as well as cities like Mangaluru and Amravati, hiding very different needs.
• Rural-urban binary – The law treats rural and urban as separate boxes, while reality is a continuum with transitional areas in between.

Problems of urbanisation in India

A. Planning deficit

• No master plans – About 52% of statutory towns and 76% of census towns have no master plan. NITI Aayog (2021) found about 65% of all urban settlements lack one.
• Outdated laws – Nine States have not updated planning laws since the 74th Amendment (1992). The model planning law most States follow dates from 1985 and is silent on the rural-urban continuum, the 74th Amendment, the 2013 Land Acquisition Act and climate adaptation.
• Shortage of planners – NITI Aayog flagged a severe shortage of trained town planners in ULBs and State town planning departments.

B. Weak devolution

• Article 243W is permissive – Notifying an area as urban does not automatically transfer the 18 functions of the Twelfth Schedule to it.
• Planning bodies on paper – Metropolitan Planning Committees (Article 243ZE) and District Planning Committees (Article 243ZD) have existed for over 30 years but are inactive or advisory in most States.

C. Fiscal stress

• Low municipal revenue – About 1% of GDP in India, compared with 7.4% in Brazil and 6% in South Africa.
• Weak property tax – Yields only about 0.15% of GDP.
• Unpredictable transfers – Piecemeal, scheme-specific grants mean cities cannot predict cash flow or borrow easily.

D. Mismatch of jurisdiction

• Problems cross boundaries – About 65% of Delhi’s PM2.5 comes from outside the city, so a municipal air plan alone cannot succeed. Water, transport and floods also work at the regional scale.
• No coordinating body – NITI Aayog and the Inter-State Council (1990) bring States together, but there is no dedicated forum for urban coordination.

E. Other visible problems

• Slums and housing shortage, unplanned peri-urban sprawl, urban flooding, traffic congestion, solid waste and water scarcity, and heat stress in dense cities.

Way Ahead

• Economic Survey 2026 – Recommends reviewing settlement status at fixed intervals against set criteria, using satellite and geospatial data on built-up growth and economic activity, not only at Census time.
• 16th Finance Commission – Raised the share of local body grants earmarked for ULBs to 45%; created a ₹10,000 crore ‘urbanisation premium’ to encourage States to merge peri-urban villages into municipal areas and frame rural-to-urban transition policies.
• Union Budget 2026 – ₹5,000 crore each for City Economic Regions, shifting focus from single cities to wider economic geographies.
• A National Urbanisation Policy (NUP) – Not a one-size-fits-all blueprint or a parallel delivery system. Based on subsidiarity, it would set shared principles so that the Centre funds, builds capacity and coordinates across levels of government.
• Seven transformations suggested by WRI India

1. Standardise classification – Clear, published criteria for statutory urban settlements, reviewed at fixed intervals using geospatial data.
2. Modernise spatial and regional planning – Give statutory force to guidance; extend regional planning below million-plus cities; make peri-urban zoning mandatory.
3. Reorient finance – Own-source revenue and formula-based transfers as the fiscal pillars; better project preparation capacity.
4. Tiered coordination – A National Urbanisation Council, like the Inter-State Council, to connect institutions and schemes.
5. Functional jurisdictions – Plan by airshed, river basin and city-region, with institutions empowered at that scale.
6. Align politics with incentives – Untied grants reaching municipalities directly through a published formula, tied to benchmarks.
7. Knowledge and learning – Support for knowledge exchange and local innovation among cities.

India cannot wait for every growing settlement to be formally labelled ‘urban’ before giving it planning, services and infrastructure.

Practice MCQ

Q1. With reference to urban areas in India, consider the following statements:

1. The Constitution prescribes a uniform minimum population for an area to be notified as a Nagar Panchayat.
2. A census town continues to be governed by a Gram Panchayat.
3. Metropolitan Planning Committees are provided for under Article 243ZE of the Constitution.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Answer: (b). Statement 1 is incorrect: Article 243Q(2) lists only broad factors; States decide thresholds through notification.

Q2. Consider the following statements:

Statement-I: Satellite-based estimates show a much higher share of urban population in India than the Census.

Statement-II: The Census measures density within administrative boundaries and does not capture peri-urban settlements outside town limits.

Which one of the following is correct in respect of the above statements?

(a) Both Statement-I and Statement-II are correct and Statement-II explains Statement-I

(b) Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I

(c) Statement-I is correct, but Statement-II is incorrect

(d) Statement-I is incorrect, but Statement-II is correct

Answer: (a). Census relies on administrative units, so growth beyond town boundaries is counted as rural.

Mains Practice Question

 “India is urbanising along a rural-urban continuum, but its laws and institutions still treat rural and urban as a binary.” Examine the consequences of this mismatch for planning and finance, and discuss the case for a National Urbanisation Policy. (250 words, 15 marks)

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