Urban areas have been recognized as “engines of inclusive economic growth”. Of the 121 crore Indians, 83.3 crore live in rural areas while 37.7 crore stay in urban areas, i.e approx 32 % of the population. The census of India, 2011 defines urban settlement as :-

All the places which have municipality, corporation, cantonment board or notified town area committee

All the other places which satisfy following criteria :

  • A minimum population of 5000 persons
  • At least 75 % of male main working population engaged in non-agricultural pursuits
  • A density of population of at least 400 persons per square kilometer
  • The first category of urban units are known as Statutory town. These town are notified under law by respective State/UT government and have local bodies like municipal corporation, municipality, etc, irrespective of demographic characteristics. For example- Vadodara (Municipal corporation), Shimla (Municipal corporation)
  • The second category of towns is known as Census Town. These were identified on the basis of census 2001 data.Cities are urban areas with more than 100,000 population. Urban areas below 100,000 are called towns in India.


Trends supporting urbanisation in India


Here are some key points regarding urbanization and planning in India:

  • Private cities are now expanding due to the support of private companies. Private developers are building private housing projects that will exponentially grow in the years to come.
  • The Delhi-Mumbai Corridor is an infrastructure program set to develop ‘Smart Cities’ and combine next-generation technology with infrastructural development.
  • The transport and logistics sector of India underlines the importance of interconnecting the different modes of transportation: road, rail, sea and air. An efficient multi-modal system is relevant in the development and successful growth of the infrastructural systems.
  • Special Economic Zones dot the landscape of India. Each of these zones is focused on a particular sector such as IT, apparel and fashion, or petroleum and petrochemical industries.
  • Industrial townships are built to house employees close to the factories and manufacturing plants at which they work. After the success of the pioneering industrial township – Tata’s Steel Town – the government is planning on developing more like it.
  • India’s expected economic growth opens up expansion prospects for Indian airports. Domestic and international passengers are inevitably predicted to double in number in the years to come


Causes of Urbanisation:

Various reasons have led to the growth of cities. They are as follows:

i. Industrialization:

  • Industrialization is a major cause of urbanization. It has expanded the employment opportunities. Rural people have migrated to cities on account of better employment opportunities.

ii. Social factors:

  • Many social factors such as attraction of cities, better standard of living, better educational facilities, need for status also induce people to migrate to cities.

iii. Employment opportunities:

  • In rural sector people have to depend mainly on agriculture for their livelihood. But Indian agriculture is depending on monsoon. In drought situations or natural calamities, rural people have to migrate to cities.

iv. Modernization:

  • Urban areas are characterized by sophisticated technology better infrastructure, communication, medical facilities, etc. People feel that they can lead a comfortable life in cities and migrate to cities.

Rural urban transformation:

  • It is an interesting aspect that not only cities are growing in number but rural community is adopting urban culture, no longer rural communities are retaining their unique rural culture. Rural people are following the material culture of urban people. Urban rural transformation can be observed in the following areas.

Spread of education:

The literacy rate has increased among the rural people. They have become more modernised.

  • Change in Dress habits.
  • Adoption of modern Technology
  • Enlightenment of women.
  • Modern transport and communication. E.g.: Cell phones have become common even among rural people.
  • Active involvement in politics.
  • Growth of infrastructure like Banks, Post office.
  • Awareness among rural consumers.
  • Increasing demand for sophisticated products like cosmetics etc.

Thus it can be noticed that there are significant changes in the life style of village people. Indian villages have adopted urban culture and urban style of living. However, all villages in India are not transformed. Only certain villages situated close to the cities have been transformed.

Effect of Urbanisation:

  • With a high rate of urbanization significant changes have taken place. The effect of urbanisation can be summed up as follows:

Positive effect:

  • Migration of rural people to urban areas.
  • Employment opportunities in urban centres.
  • Transport and communication facilities.
  • Educational facilities.
  • Increase in the standard of living.

Urbanization can yield positive effects if it takes place up to a desirable limit. Extensive urbanisation or indiscriminate growth of cities may result in adverse effects. They may be as follows:

  1. Problem of over population:
  • Concentration of population is a major problem of cities. It has resulted in accommodation problem, growth of slums etc.
  1. Disintegration of Joint family:
  • Joint family can’t be maintained in cities on account of high cost of living: People prefer to live in the nuclear type of families.

iii. Cost of living:

  • High cost of living is a major problem of cities. In Metro cities like Mumbai, Bangalore etc. it is very difficult for lower income groups to maintain a decent standard of living.
  1. Increase in Crime rates:
  • Urban centres are known for high rate of crimes. Theft, Dacoity, Murder, Cheating, Pick pocketing, rape etc. are common in urban centres.
  1. Impersonal relations:
  • Urban centres are characterised by highly secondary relations. The concept of neighbourhood, community life are almost absent in cities. Urban life is highly monotonous. This may have an adverse psychological effect on individuals. People are often self centred and they have no concern for the fellow human beings.
  1. Problem of Pollution:
  • In industrialized cities pollution is a major problems. It may be caused by industries or by excessive movement of vehicles.

viii. Stress:

  • Urban life is characterised by stress which may even strain family relations. In cities employment of women is almost inevitable to meet the increasing cost of living. Changing role of women in the family creates stress in the family which may result in divorce or strained relations.
  • Thus urbanisation has its own merits and de-merits. Urbanization can’t be avoided. But the negative effect of urbanization can be minimised.


challenges in urban development
Institutional challenges 

Urban Governance


  • 74th amendment act has been implemented half-heartedly by the states, which has not fully empowered the Urban local bodies (ULBs). ULBs comprise of municipal corporations, municipalities and nagar panchayats, which are to be supported by state governments to manage the urban development. For this , ULBs need clear delegation of functions, financial resources and autonomy. At present urban governance needs improvement for urban development, which can be done by enhancing technology, administrative and managerial capacity of ULBs.


  • Planning is mainly centralized and till now the state planning boards and commissions have not come out with any specific planning strategies an depend on Planning commission for it. This is expected to change in present government, as planning commission has been abolished and now focus is on empowering the states and strengthening the federal structure.
  • In fact for big cities the plans have become outdated and do not reflect the concern of urban local dwellers, this needs to be take care by Metropolitan planning committee as per provisions of 74th amendment act. Now the planning needs to be decentralized and participatory to accommodate the needs of the urban dwellers.
  • Also there is lack of human resource for undertaking planning on full scale. State planning departments and national planning institutions lack qualified planning professional. Need is to expand the scope of planners from physical to integrated planning- Land use, infrastructure, environmental sustainability, social inclusion, risk reduction, economic productivity and financial diversity.


  • Major challenge is of revenue generation with the ULBs. This problem can be analyzed form two perspectives. First, the states have not given enough autonomy to ULBs to generate revenues and Second in some case the ULBs have failed to utilize even those tax and fee powers that they have been vested with.
  • There are two sources of municipal revenue i.e. municipal own revenue and assigned revenue. Municipal own revenue are generated by municipal own revenue through taxes and fee levied by them. Assigned revenues are those which are assigned to local governments by higher tier of government.
  • There is need to broaden the user charge fee for water supply, sewerage and garbage disposal. Since these are the goods which have a private characteristics and no public spill over, so charging user fee will be feasible and will improve the revenue of ULBs , along with periodic revision. Once the own revenue generating capacity of the cities will improve, they can easily get loans from the banks. At present due to lack of revenue generation capabilities, banks don’t give loan to ULBs for further development. For financing urban projects, Municipal bonds are also famous, which work on the concept of pooled financing.


  • There is exponential increase in the real estate, encroaching the agricultural lands. Also the rates are very high, which are not affordable and other irregularities are also in practice. For this, we need regulator, which can make level playing field and will be instrumental for affordable housing and checking corrupt practices in Real estate sector.

Infrastructural challenges


  • Housing provision for the growing urban population will be the biggest challenge before the government. The growing cost of houses comparison to the income of the urban middle class, has made it impossible for majority of lower income groups and are residing in congested accommodation and many of those are devoid of proper ventilation, lighting, water supply, sewage system, etc. For instance in Delhi, the current estimate is of a shortage of 5,00,000 dwelling units the coming decades. The United Nations Centre for Human Settlements (UNCHS) introduced the concept of “Housing Poverty” which includes “Individuals and households who lack safe, secure and healthy shelter, with basic infrastructure such as piped water and adequate provision for sanitation, drainage and the removal of household waste”.

Safe Drinking Water

  • The safe drinking water sources are also found to be contaminated because of water in the cities are inadequate and in the future, the expected population cannot be accommodated without a drastic improvement in the availability of water. The expenses on water treatment and reuse will grow manifold.


  • The poor sanitation condition is another gloomy feature in urban areas and particularly in slums and unauthorized colonies of urban areas. The drainage system in many unorganized colonies and slums are either not existing and if existing are in a bad shape and in bits resulting in blockage of waste water. This unsanitary conditions lead to many sanitation related diseases such as diahorrea and malaria. Unsafe garbage disposal is one of the critical problem in urban areas and garbage management always remained a major challenge.

Health conditions

  • The important indicators of human development are educationand health. The health condition of urban poor in some areas are even more adverse compared to rural areas. As many as 20 million children in the developing countries are dying consequent to drinking water. About 6, 00,000 persons are losing their lives on account of indoor air pollution (Jagmohan, 2005).
  • The National Family Health Survey, 2006-07 has envisaged that a lot of women and children are suffering from nutritional anaemia and diseases like tuberculosis and asthma are occurring in good number. Providing health care services to the growing urban population is major challenge before the government health care delivery system.
  • They have to take the help of private players as public health facilities are poor. In case of migrants, they cannot take the benefit of government policies, so they have to pay very high charges, which keep them in the vicious cycle of poverty. Urban education system also is becoming elite in private institution due to limited seats and high charged fee. The condition of public educational institution is dismal.

Urban public transport

  • As high income individual are buying more private vehicle and use less public transport. Such huge number of vehicles in cities is causing more traffic jam, which in turn decreases the efficiency of public transport. Also the penetration of public transport is less, which make people use private vehicle. Public transport
    is less disabled friendly. There is also lack of infrastructure and poor maintenance of existing public transport infrastructure


Opportunities in India’s urban infrastructure

  • In order to face the challenges of urbanization, infrastructures need to be improved. Unfortunately, rapid population growth and a lack of adequate investment is making urban infrastructure growth slow.

Affordable housing in India

  • India is facing a house shortage in urban areas at the moment and more housing would be required in order to meet future demand. This demand comes from the economically weaker section due to lack of housing policies. Some parts in India have introduced public-private-partnership policies, which have led to the development of housing.

Transport business opportunities in India

  • Private mode of transport is dominant in India. There is a heavy reliance on private transport that has led to the congestion of roads and increasing commuting time and pollution. Road networks therefore need to increase because of the influx of these vehicles.
  • On a separate note, public mode of transport is gradually decreasing in terms of popularity.
    In an effort to improve the urban transport situation in India, new metro rail networks have been developed.

Water and wastewater management in India

  • The water supply in India faces several issues and the water and wastewater management in the country needs to be improved. The government though has made initiatives to improve water supplies establishing projects for selected areas.
  • Sewage and sanitation is also facing a dilemma in India at the moment. Nevertheless, projects to further improve this is currently a work in progress.

Power and power infrastructure requirements in India

  • Increasing urbanization has led to increasing demand in energy consumption. India greatly needs to increase their power-generating capacity and develop new ways of generating power


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