Urbanization and Town Classification in India: Understanding the Dynamics

India’s cities are not all growing the same way. While Mumbai and Bengaluru continue to expand at a breathtaking pace, thousands of smaller towns across the country are either growing slowly or losing ground altogether. This uneven pattern is one of the most important – and often overlooked – features of India’s urbanization story. To understand it, we first need to look at how the Census of India classifies towns and cities by size, and what the data across several decades tells us about who is growing, who is stagnating, and why.

How the Census of India classifies urban settlements
The long arc of Indian urbanization: 1901 to 2011
The rise of Class I cities
Differential trends: smaller towns left behind
Why smaller towns struggle
The census town phenomenon
Urban agglomerations and the blurring of city boundaries
Regional variation in urbanization
What the concentration of urban population means for planning

How the Census of India classifies urban settlements

Not every urban area in India is the same, and the census reflects this by placing all urban settlements into a six-tier size classification. Urban population in India is conventionally presented in this six-fold classification, ranging from the largest cities down to the smallest towns. Here is what each class looks like:

Class I cities: Population of 1,00,000 (one lakh) or more
Class II cities: Population between 50,000 and 99,999
Class III towns: Population between 20,000 and 49,999
Class IV towns: Population between 10,000 and 19,999
Class V towns: Population between 5,000 and 9,999
Class VI towns: Population below 5,000

Within Class I, the census makes further distinctions. Urban centres with populations between one and five million are called metropolitan cities, while those exceeding five million are designated as mega cities. Cities like Delhi, Mumbai, Kolkata, and Chennai fall into this mega city bracket.

Beyond size classification, urban areas are also categorised by their legal and demographic status. The Office of the Registrar General of India recognises urban administrative units such as municipal corporations, municipalities, cantonment boards, and notified town area committees as Statutory Towns. Any other place meeting the criteria of at least 5,000 population, a density of 400 or more persons per square kilometre, and at least 75% of male workers engaged in non-agricultural activities qualifies as a Census Town. This distinction matters because census towns lack formal urban governance but are statistically counted as urban – a gap that has grown significantly over time.

The long arc of Indian urbanization: 1901 to 2011

India’s urbanization has been gradual but consequential. The number of urban agglomerations and towns grew from 1,827 in 1901 to 7,935 by 2011, while urban population rose from 2.58 crore to 37.71 crore over the same period. In percentage terms, India went from being about 10.8% urban in 1901 to 31.2% urban by 2011.

This trajectory was not smooth. From 1921 to 2001, while the total population grew four times, urban population grew ten times. The net addition in urban population was 5 million during 1921-31, rising to 18 million in 1941-51, and jumping sharply to 50 million during 1971-81.

A notable interruption occurred in the 1950s. In the 1961 census, as many as 803 towns with a combined population of 4.4 million were declassified, causing the decade’s urban growth rate to drop sharply – not because fewer people were living in urban conditions, but because the criteria for defining “urban” were tightened. This episode underscores an important point: the count of towns at any given time reflects both real demographic change and definitional choices made by the state.

After a period of deceleration in the 1980s and 1990s, the 2011 census recorded an urban turnaround. For the first time since independence, the absolute increase in urban population exceeded that in rural population, even though the majority of Indians still lived in rural areas. The total number of towns jumped from 5,161 in 2001 to 7,935 in 2011 – an increase of 2,774 towns in a single decade.

The rise of Class I cities

The most striking feature of India’s urban growth is the dominance of Class I cities. Their share of the total urban population has risen consistently over decades. The share of Class I cities in total urban population stood at 31.2% in 1931, rose to 38.2% in 1941, reached 51.4% in 1961, and climbed further to 70.2% by 2011.

In absolute terms, the number of Class I urban areas grew from 394 in 2001 to 468 in 2011, and approximately 264.9 million persons – constituting 70% of the total urban population – lived in these Class I towns and cities. That means roughly seven out of every ten urban Indians live in cities with populations above one lakh.

At the very top of this pyramid sit India’s million-plus cities. The number of million-plus cities grew from just 5 (with 18.81% of urban population) in 1951 to 23 (32.54%) in 1991, and further to 53 cities (42.62% of urban population) by 2011. Kolkata was the only million-plus city at the start of the 20th century. Mumbai joined in 1911. Delhi, Chennai, and Hyderabad entered the million-plus category only in 1951, and the decade 1981-91 saw eleven new metropolises added to this list.

Differential trends: smaller towns left behind

The flip side of Class I city growth is the relative stagnation – and in many cases, decline – of smaller towns. This is the essence of what scholars call differential urbanization: different size classes of towns grow at very different rates, with large cities pulling ahead while smaller ones fall behind.

While Class I cities held 70.2% of urban population in 2011, their share of the total number of towns was only 7.6%. The share of all other town classes in total urban population has declined over the years, even as their share in total number of towns has generally increased. In other words, there are more small towns, but they collectively account for a shrinking fraction of the urban population. This pattern reflects a growing concentration of people – and resources – in larger centres.

Recent research shows an increasing share of stabilising towns, a declining share of growing towns, and the emergence of declining towns – especially among small and medium-sized urban centres. This backward shift in the growth trajectory is a concerning development for balanced regional development.

Why smaller towns struggle

The reasons smaller towns lose population and economic momentum are structural. They typically lack the concentration of industries, services, and institutions that draw workers and businesses. A substantial increase in the share of urban population has been registered only by Class I towns, with Class II and III towns showing a declining share of urban population even as their numbers increased – a phenomenon described as hyper-urbanization.

Limited infrastructure also plays a role. Smaller towns often have inadequate public transportation, poor healthcare facilities, and insufficient educational institutions. These gaps accelerate out-migration to larger cities, creating a self-reinforcing cycle where the towns that need investment the most are the least attractive to investors.

The census town phenomenon

One significant driver of the 2011 urban expansion was the dramatic rise in census towns – places that are functionally urban but lack statutory governance. The number of census towns in India grew from 1,362 in 2001 to 3,894 in 2011, and they accounted for approximately 30% of urban growth in that decade. The largest increases were seen in West Bengal and Kerala. These areas often lack the legal status needed to access urban development funds, which puts them in an administrative grey zone even as their populations urbanize in practice.

Urban agglomerations and the blurring of city boundaries

As Class I cities grow, they increasingly spill beyond their administrative limits, absorbing surrounding towns and villages into continuously built-up zones. An urban agglomeration (UA) is defined as a continuous urban spread comprising a town and its adjoining outgrowths, or two or more physically contiguous towns, with a total population of at least 20,000. As per the 2011 census, there were 468 such urban agglomerations in India.

This agglomeration process means that the administrative boundaries of a city often significantly undercount its real urban footprint. People living in peri-urban outgrowths may depend on a central city for jobs, markets, and services, yet are counted separately – or not counted as urban at all. India is the world’s most populous country, yet also one of the least urban by official measures, and it has long been known that official estimates of urban percentages conflict with estimates derived from alternative conceptions of urbanization.

Regional variation in urbanization

Urbanization in India is also deeply uneven across states. Southern and western states have higher levels of urbanization compared to northern and north-eastern regions. States like Himachal Pradesh (10%), Bihar (11.3%), and Assam (14%) lag significantly behind the national average, while Tamil Nadu approached 44% urban population in 2011.

This regional imbalance mirrors the distribution of Class I cities. States with strong industrial corridors – Maharashtra, Gujarat, Karnataka, and Tamil Nadu – host a disproportionate number of large urban centres. This has led to what researchers describe as a polarised urban growth pattern, where some states surge ahead and others stagnate. States like Maharashtra, Gujarat, Punjab, Haryana, and Delhi have clear advantages, while Bihar, Jharkhand, West Bengal, and Assam are lagging behind in an increasingly polarised pattern.

What the concentration of urban population means for planning

The growing concentration of people in Class I cities creates both opportunities and problems. Large cities contribute disproportionately to GDP, offer better public services, and drive innovation. But they are also stretched thin. The rapid influx of population puts intense pressure on housing, water, transport, and sanitation systems.

Meanwhile, the neglect of smaller towns creates its own set of problems – rural areas lose people and economic activity, and mid-sized towns that could have served as regional growth anchors fail to develop the critical mass needed to attract sustained investment. A holistic and decentralised urban planning approach is needed to accommodate the needs of urban inhabitants and foster sustainable development across all size classes of towns.

India’s current urban classification system, rooted in criteria set in 1961, is also increasingly questioned as inadequate for capturing the real scale of urbanization. By current definitions, only 31.2% of India is considered urban – a figure widely argued to undercount actual urbanization levels because the criteria are considered particularly restrictive. As the next census approaches, redefining what counts as “urban” could itself reshape the picture of how India is growing.

What do you think? If India’s smaller towns continue to lose ground to mega cities, what does that mean for communities that depend on them as local economic and cultural centres? And should the definition of “urban” in India be updated to better reflect the realities of how and where people actually live today?

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Table of Contents

How the Census of India classifies urban settlements 🔗

The long arc of Indian urbanization: 1901 to 2011 🔗

The rise of Class I cities 🔗

Differential trends: smaller towns left behind 🔗

Why smaller towns struggle 🔗

The census town phenomenon 🔗

Urban agglomerations and the blurring of city boundaries 🔗

Regional variation in urbanization 🔗

What the concentration of urban population means for planning 🔗