7 PM | Urban settlements | 18 February, 2019

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Present state of urbanization in India:

According to 2011 Census, the level of urbanisation in India increased from 27.7% in 2001 to 31.15% in 2011 and, the urban population grew to 387 million. In 2017 the annual growth rate of urbanization in India was 2.324 %.

Estimated trend of urbanization in India:

According to the government, 60% Indian population would be living in cities by 2050. India’s increasing urban population and lopsided pattern of urbanization highlights the need for developing small and medium cities to achieve sustainability in the urban system.


The pattern of urbanization in India has been uneven region wise and state wise:

  • Urbanization is more pronounced in southern India as compared to north. In states like Maharashtra and Tamil Nadu more than 35 per cent people live in urban centres, whereas in UP it is only 20 %, 14.3% in Orissa and 10% in Bihar.
  • Coastal states fare better in urbanization as Gujarat and Goa fare more that 35% i.e. more than national average. Coastal cities such as Mumbai (in Maharashtra) historically benefitted from being linked to trade routes with the rest of the world.
  • States wise distribution is also uneven as in north India Punjab has more than 35% people are living in urban centers as compared to UP, Bihar and Orissa.

Reasons behind skewed urbanization in India:

Historical reasons:

  • Urbanization in India passed through different phases of history and around the year 1800, about 11% of the total population of the country lived in urban areas.
  • British introduced three metro cities Bombay, Calcutta and Madras, created chain of hill stations, introduced civil lines and cantonments and other industrial towns like Kanpur, Dhanbad etc. In all, urbanization under British was stagnant as few new cities came up but most of the pre-British cities desperately declined.
  • At the time of independence, due to World War II and partition of the country and resulting influx of people, there was sudden spurt in urban growth until 1951, as 14 new towns came up. Urbanization in this period grew from 13.86% in 1941 to 17.29% in 1951.

Other reasons include:

  • Growth Pole based economic model: This model was based on creation of few growth centers or industrial cities based on the assumption that growth impulses will trickle down from the center to the periphery. This model resulted into creation of few selected industrial cities and growth poles like Rourkela, Bhilai and Durgapur, thus neglecting regional balanced development.
  • Slow pace of agricultural growth: Agricultural sector was neglected until second half of 1960s and that too was limited in a few regions of north India and South India (Haryana, Punjab and Tamil Nadu) which were the part of Green Revolution, which led to migration of people from rural to urban cities.
  • LPG reforms: Economic reforms and the ensuing opportunities brought by globalization were focuses in few capital cities like Bengaluru, Chennai and Hyderabad etc and IT hubs like Pune etc.
  • Delayed rural development: Rural development got a delayed push during green revolution and that too was localized. The period, post economic reforms, has further pushed rural development to the background, which has resulted into haphazard distress migration of rural people to towns.  
  • Push and pull factors: Push factors such as agricultural distress, limited employment opportunities, lack of infrastructural facilities have had compelled people from rural areas to migrate to urban centers. In the absence of development in small and medium cities, the migration has taken place primarily in larger cities providing source of employment, livelihood security and some better basic facilities.

Asymmetrical urbanization in India:

  • Pseudo-urbanization: The push and pull factors have resulted into migration of people from rural areas to urban cities. But, there has been continuous concentration of population in class I towns, up to 60%, which are 465 in number out of total 7935 urban settlements. But only 27 per cent of our urban population lives in small and mid-sized towns. This trend has been termed as over urbanization, pseudo- urbanization or ‘large city oriented’ urbanization.
  • Census towns based urbanization: Increase in level of urbanization in recent years has been driven by Census towns which are administratively treated as villages. The number of census towns increased by three times, with census 2011 recording 3,894 census towns as against 1,362 in 2001.


Important Concepts
1. Statutory towns (STs): Statutory towns are those which have been granted a municipal status by the State government. STs include all places with municipality, municipal corporation, municipal council, Nagar Panchayat or a notified town area committee.
Examples: Ajmer (M Corp.), Kota (M Corp.) etc.
2. Census towns (CTs): Census Towns comprise all settlements that fit the Census criteria prescribed by the Central Government. To be declared a CT, a settlement has to fulfil the following three conditions:
• the population must be 5,000 or more,
• the density must be at least of 400 persons per square kilometre, and
• 75% of the male main workforce should be employed in the non-agricultural sector.
Example: Badlya in Ajmer District, Burarri Gaon in North Delhi
Definitional Issues:
• Census Towns are not governed by an urban local body. They are considered as urban by the Census of India and their population is included in the urban population but they remain governed by rural local bodies. For example: In 2001, the official urban population was estimated at 27.8% but the population under urban governance was around 25.5% only
• The rural local bodies are not equipped to cater to the needs of large population residing in these census towns and their development is adversely affected due to administrative loopholes. Further, these towns benefit only from the rural schemes. The fact that they continue to be administered as rural villages also means that they are not on the priority of state and central governments as far as urban infrastructure is concerned
• Note: In January 2018, the Ministry of Urban Development has asked 28 Indian States to take action to convert 3,894 census towns into statutory urban local bodies (ULBs) to promote planned urban development.
Various Classes of Urban settlements in India
1. Class I: 10,00,000 and above
2. Class II: 50,000 to 99,999 persons
3. Class III: 20,000 to 49,999 persons
4. Class IV: 10,000 to 19,999 persons
5. Class V: 5,000 to 9,999 persons
6. Class VI: Less than 5,000 persons



Over-population and concentration of people in cities leads to following problems:

  1. Poor Basic Services: Top heavy urbanization has led to inadequate provision for social infrastructure i.e. congestion, housing shortages and consequent proliferation of slums, denial of safe drinking water, waste disposal and sewerage problem, electricity, sanitation to extreme poor and rural migrants. Megacities grow in urban population not in urban prosperity and culture.
  2. Unemployment and Urban poverty: Class I cities such as Kolkata, Mumbai, Delhi, Chennai etc have reached saturation level of employment generating capacity. Most of these cities using capital intensive technologies cannot generate employment for distressed rural poor. So, there is transfer from rural poverty to urban poverty.
  3. Environmental degradation: Drying up and encroachment of urban wetlands, pollution, ground water depletion and degradation in the quality of urban life.
  4. Regional Disparity: Further, the skewed pattern of urbanization and increased primacy of cities have led to regional imbalances and there has been unequal industrialization and infrastructural development in small and medium sized cities.
  5. Violence and crime: Urbanization is generating social and economic inequalities which warrant social conflicts, crimes and anti-social activities.
  6. Promotes informalisation of economy: Illiterate, low-skilled or unskilled migrants from rural areas are absorbed in poor low-grade urban informal sector at a very low wage-rate and urban informal sector becomes inefficient and unproductive.
  7. Socioeconomic stress: Urbanization affects mental health through the influence of increased stressors and factors such as overcrowded and polluted environment, risk of poverty, high levels of violence, and reduced social support.
  8. Isolation of women and elderly: Movement of population to urban areas has led to large number of older men and women left to look after themselves in the rural areas, while the young generation lives in the cities for livelihood. This also leads to less availability of caregivers for old people.
  9. Cultural disconnect: Sudden cultural transformation from rural to urban culture is also one of the factors leading to stress-related disorders.

Diverting migration evenly among the urban centers:

Since the large cities have reached saturation level for employment generation and to avoid over-crowding into the major cities it is required to build strong economic sector in remaining urban centers. Growth efforts and investments should be directed towards small cities which have been neglected so far so that functional base of urban economy is strengthened.

Why is it important to develop small and medium cities in India?

  1. Absorbing rural in-migrants and easing congestion in large cities: Self-reliant small and medium cities can act as natural sinks that absorb a substantial share of rural migration and thus help ease the growing pressure on larger cities.
  2. Balanced Regional development: With larger cities becoming magnets of economic growth, there is a growing concern about the increasing regional imbalances in development. Planning for economic and infrastructural development in small and medium cities can help achieve more regional equity. Like, local entrepreneurship and infrastructure investments have developed a small town, Kishangarh in Rajasthan, into a marble trading hub.
  3. Employment:
  • Small towns contribute significantly more in generating non-farm employment as compared to large cities. Thus, it is important to develop small and medium sized towns for employment creation for rural migrants who have moved out of agriculture.
  • Further, small and medium cities can play an important role in addressing disguised unemployment in agriculture by providing wider employment opportunities in close proximity to agricultural centres
  1. Boost to rural economy:
  • Small towns act as markets for agricultural produce from the rural region and provides a link to the national and export markets.
  • Act as centers of demand/markets for agricultural produce from the rural region.
  • Act as centers for the production and distribution of goods and services to their rural region.
  • They become centers for the growth and consolidation of rural non-farm activities and employment.
  • Development of small and medium cities near agricultural centres would also boost R&D and extension services for agriculture.
  1. Preservation of traditional art and handicrafts: Many Small and medium towns in India are sites of India’s rich traditional arts and handicrafts. With infrastructural development, development of market and access to quality education and complementary livelihood opportunities, migration to large cities can be halted and this in turn will help preserve art and handicrafts.
  2. Preservation of language and culture: Development of small and medium cities can also play a large role in preserving India’s lingual and cultural diversity which is often lost after people move to large metropolis and are forced to assimilate into the metro culture.
  3. Sustainability: Small towns and cities can help in effectively natural resources in ways that respond to the needs of growing rural and urban populations amidst local and global environmental changes

Indian Government schemes for developing census towns and small & medium cities

Integrated Development of Small and Medium Towns (1979-80)Its main objective has been to slow down migration from rural areas end smaller towns to large cities by the development of selected small and medium towns which are capable of generating economic growth and employment.
Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT)It aims to improve urban infrastructure in towns and cities via better planning, access to funding and by capacity building in urban local bodies.
Smart Cities Mission (SCM)It aims at sustainable and inclusive development of cities to improve the quality of life of citizens. Many small and medium sized cities have been included under SCM
Provision of Urban Amenities for Rural Areas (PURA)Aims to provide basic infrastructure to potential growth centres in a Gram Panchayat (or a group of Gram Panchayats) through PPP. The scheme is expected to be beneficial for census towns.
RURBAN MissionIt aims at development of rural growth clusters which have latent potential for growth
MUDRA SchemeThe scheme provides loans up to Rs. 10 lakh to the non-corporate, non-farm small/micro enterprises. The scheme has an important role to play for fostering local entrepreneurship in census towns and small cities.
Stand Up IndiaIt aims at promoting entrepreneurship among women and scheduled castes and tribes.

How to develop small and medium cities?

  1. Administration of census towns: The government should restructure the administrative structure of census towns by:
  • Bringing them under urban local governments considering their urban characteristics.
  • Capacity building of rural institutions governing census towns by provisioning a separate development plan for census towns as a sub-plan of Panchayat Plans.
  1. Financial provisioning: Financial support for development of small towns should be in two ways:
  • Investment in creation of entrepreneurial climate in small towns by state via creation of adequate physical infrastructure like roads, electricity, SEZs and law and order etc. India spends about $17 per capita annually on urban infrastructure projects, against a global benchmark of $100 and China’s $116.
  • Handholding support to private investors during initial stages in the form of tax rebate in state services as small towns cannot generate service charges for private investments in urban infrastructure.
  1. Independence and support to local finances: Urban governments in small towns should be given freedom to raise local finances. Innovative instruments like municipal bonds, which suffer due to reluctant investors, unclear regulation and low credit ratings, should be promoted at local level with support from state level guarantees.
  2. Institutional support: India could consider a National Local Body Financing Authority (NLBFA) at the national level and a State Local Body Financing Authority (SLBFA) to meet the requirements of urban local bodies. NLBFA and SLBFA could focus on standardization of budget making processes by the urban bodies, assess the financial requirements of feasible projects, train the relevant personnel in budget accounting and policy preparation, and tap the capital markets.
  3. Spurring agricultural growth around small towns: Agriculture in the hinterlands of small and medium towns should be developed to boost rural demand and establish a robust rural consumer base. This in turn would help in development of agriculture ancillary economy in these towns as small towns have contributed significantly more in generating non-farm employment as compared to large cities.
  4. Role of private players: PPPs and corporate entities should be incentivized to invest in these small and medium cities. For example: a medium sized city of Tirupur in Tamil Nadu has successfully used a PPP model to augment its urban water supply system.
  5. MSMEs and labour-intensive industries: Small industrial units requiring less investments and labour intensive industries should be established in small towns, which would also absorb unskilled and semi-skilled workforce from rural hinterlands.
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