National Urbanisation Policy: Rethinking India’s Urban Growth and Governance

Context

India is preparing to conduct its first Census in 16 years while retaining the urban classification criteria of Census 2011. This may overlook the expansion of rapidly growing peri-urban settlements and underestimate the country’s actual urban population, strengthening the case for a comprehensive National Urbanisation Policy (NUP).

What is the National Urbanisation Policy (NUP)?

The proposed National Urbanisation Policy aims to provide an integrated framework for managing India’s expanding cities, towns and peri-urban regions.

• It seeks to move beyond the conventional rural-urban divide towards a continuum-based understanding of urbanisation.
• It emphasises coordinated planning of land use, housing, transportation, infrastructure, economic activities and environmental resources.
• It aims to align urban governance with the actual geographical and economic expansion of settlements.

Understanding India’s Urban Settlement Classification

India broadly recognises two categories of urban settlements:

1. Statutory Towns:

• Settlements officially notified as urban areas by state governments under municipal laws.
• Include Municipal Corporations, Municipalities and Nagar Panchayats.
• Their classification depends on administrative notification rather than specific population thresholds.

2. Census Towns:

• Settlements that retain rural administrative arrangements but satisfy three demographic conditions:
  • Population of at least 5,000.
  • Population density of at least 400 persons per sq. km.
  • At least 75% of the male main working population engaged in non-agricultural activities.

3. Emerging Peri-Urban Settlements:

• Areas located between established cities and rural settlements.
• Although their economic activities, employment patterns and commuting networks are increasingly urban, they frequently remain under Gram Panchayat administration.

Key Data and Trends in India’s Urbanisation

• Urban Population: Census 2011 recorded approximately 377 million urban residents across nearly 8,000 settlements. UN projections indicate that India’s urban population could exceed 720 million by 2050.
• Underestimated Urbanisation: Satellite-based estimates cited in the Economic Survey suggested that India was already approximately 63% urban in 2015, considerably higher than conventional census estimates.
• Peri-Urban Expansion: These settlements are expanding at approximately 4.15% annually, compared with 2.9% growth in core municipal areas.
• Planning Deficit: Nearly 52% of statutory towns and 76% of census towns lack master plans.
• Weak Municipal Finances: Municipal revenues account for around 1% of GDP, while property tax collections contribute only about 0.15% of GDP.

Why Does India Need a Comprehensive National Urbanisation Policy?

1. Mismatch Between Urban Growth and Administrative Boundaries

• Economic activities and population growth increasingly extend beyond municipal boundaries.
• However, surrounding settlements continue to function under rural governance structures.

Example: The Bhiwandi logistics hub near Mumbai covers 60 villages and nine census towns, with over 91.8% non-agricultural employment. Despite its urban economic character, essential civic services remain under rural panchayat administration.

2. Inadequate Institutional and Technical Capacity

• Gram Panchayats often lack specialised engineers, urban planners and financial resources to manage high-density settlements.
• This creates difficulties in providing drainage, sanitation, fire safety, waste management and organised transportation.

3. Outdated Urban Planning Laws

• Several states continue to rely on outdated town-planning legislation.
• Nearly nine states retain outdated town-planning frameworks, limiting the integration of climate resilience, modern zoning and regional development.

4. Unequal Access to Urban Finance

• Census towns frequently remain excluded from dedicated municipal grants, urban infrastructure financing and municipal bond markets.
• Their dependence on limited rural development grants restricts the provision of essential infrastructure.

5. Fragmented Environmental Governance

• Environmental challenges such as air pollution, water scarcity and flooding extend beyond municipal boundaries.
• Planning confined to individual cities cannot adequately address these interconnected problems.

Example: More than 65% of Delhi’s winter PM2.5 pollution reportedly originates outside its municipal limits, demonstrating the importance of regional air-quality management.

Seven Major Reforms Required Under the National Urbanisation Policy

1. Modernise Urban Classification Systems

• Introduce periodic urban settlement assessments using satellite imagery, geospatial information and economic indicators.
• Recognise functional urban regions instead of relying exclusively on decennial census-based classifications.

2. Strengthen Regional and Spatial Planning

• Extend statutory regional master planning to smaller cities and emerging urban clusters.
• Integrate housing, transport, industrial development, land-use conversion and climate adaptation.

3. Reform Municipal Financial Systems

• Improve property tax collection through digital mapping and updated property records.
• Introduce predictable, formula-based financial transfers and strengthen municipalities’ own-source revenues.

4. Establish a National Urbanisation Council

• Create an intergovernmental institutional platform involving the Union, states and local governments.
• Coordinate urban investments, address jurisdictional disputes and facilitate policy convergence.

5. Adopt Functional-Region-Based Governance

• Organise infrastructure and environmental planning around natural and economic regions.
• Integrate airsheds, river basins, metropolitan transport networks and commuter corridors.

6. Link Financial Assistance with Democratic Devolution

• Connect central urban infrastructure assistance with the effective transfer of the 18 functions listed under the Twelfth Schedule.
• Encourage states to strengthen Urban Local Bodies and integrate emerging peri-urban settlements.

7. Build Technical and Institutional Capacity

• Establish shared technical services and Project Preparation Facilities (PPFs).
• Help Tier-2 and Tier-3 cities prepare financially viable infrastructure projects and adopt innovative urban management practices.

Way Forward

• Leverage the 16th Finance Commission: Utilise the proposed ₹10,000-crore Urbanisation Premium to encourage the integration of peri-urban settlements with adjoining Urban Local Bodies.
• Strengthen Planning Committees: Make Metropolitan Planning Committees (MPCs) and District Planning Committees (DPCs) operational under Articles 243ZE and 243ZD, respectively.
• Promote City Economic Regions (CERs): Utilise the proposed ₹5,000-crore allocation for integrated infrastructure, public transport and shared civic services across urban clusters.
• Ensure Devolution of the 3Fs: Strengthen the transfer of Funds, Functions and Functionaries to urban local governments so that administrative responsibilities are supported by adequate resources and personnel.
• Improve Accountability: Introduce transparent urban governance indicators, citizen participation and periodic assessments of municipal service delivery.

Conclusion

India’s urban transformation is increasingly taking place beyond the boundaries of officially recognised cities. Continuing to govern economically urban settlements through predominantly rural institutions creates gaps in infrastructure, finance and environmental management. A comprehensive National Urbanisation Policy based on functional urban regions, stronger municipal institutions and coordinated regional planning is essential for achieving inclusive, sustainable and climate-resilient urban development.

Source : The Hindu