Census 2027 will keep the 2011 urban definitions, though India’s own economic and fiscal institutions have moved beyond them.

A National Urbanisation Policy is proposed to bridge this gap.

• The definition: A settlement is urban if a State notifies it as a statutory town, or if it meets three census town criteria: population of at least 5,000, density of at least 400 persons per sq km, and 75% of male workers in non-agricultural work.
• In 2011, India was 31.2% urban. The Economic Survey 2026, using satellite data, says India was about 63% urban in 2015.
• Uneven growth: About 94% of urban settlements are small towns, while about 60% of urban people live in Class I cities. Peri-urban areas grow faster (4.15% a year) than city areas (2.9%).
• Recent signals: Budget 2026-27 gave ₹5,000 crore to each City Economic Region, and the 16th Finance Commission raised the urban local bodies’ share of local grants to 45% and created a ₹10,000 crore urbanisation premium.

• A gateway: Master plans, municipal finance, grants, building rules and scheme eligibility all depend on it.
• State discretion: Article 243Q(2) leaves the notification of urban areas to the Governor, with no standard criteria.
• Binary, not a continuum: The Bhiwandi region has 60 villages and nine census towns, with 91.8% of jobs outside agriculture, yet is governed as rural.
• Planning gaps: About 52% of statutory towns and 76% of census towns have no master plan.
• Optional devolution: Article 243W makes devolution permissive, so new urban areas do not automatically get the 18 functions of the Twelfth Schedule.

Census 2027 will count urban India with a yardstick that the Economic Survey, the Budget and the Finance Commission have already moved beyond. A National Urbanisation Policy would connect these pieces.

• Shared principles: Based on subsidiarity, it would bring together the Census rules, Finance Commission formulae and scheme criteria, which already decide what counts as urban.
• Classification: The Census misses fast-growing settlements like Bhiwandi, so status should be reviewed at fixed intervals using satellite data.
• Spatial planning: About 52% of statutory towns and 76% of census towns have no master plan. The Metropolitan and District Planning Committees (Articles 243ZE and 243ZD) should get statutory force, with planning extended below the million-plus level.
• Finance: Municipal revenue is only about 1% of GDP (Brazil: 7.4%), and property tax yields 0.15%. Own-source revenue and formula-based transfers should be the pillars.
• Coordination: A National Urbanisation Council could link the Inter-State Council and the Central Council of Local Government.
• Functional units: Plan around airsheds, basins and city regions, since 65% of Delhi’s PM 2.5 comes from outside the city.

• Accurate recognition directs planning, services and funds to where people live.
• Fiscal alignment between Finance Commission grants and Budget schemes.
• Better cities: Stronger planning helps housing, infrastructure and climate adaptation.

• Comparability versus accuracy: Changing definitions breaks comparison across Census years.
• State discretion and weak local finances.
• Fragmented institutions with unclear accountability.

• 74th Constitutional Amendment (1992): Added Part IXA and the Twelfth Schedule (18 functions).
• Articles: 243Q (municipalities), 243W (powers), 243ZD and 243ZE (planning committees).