Functional Urban Settlements Category Under Consideration

India uses administrative and population-based criteria to classify urban areas, and a new category for functional urban settlements is under consideration in 2026. The existing framework includes Census Towns with a population above 5,000 and Statutory Towns with municipal bodies.

Urban Classification in India

Urban classification in India is linked to the Census of India and municipal administration. Census Towns are settlements that meet population, density, and workforce criteria, while Statutory Towns are notified urban local bodies under state law.

Degree of Urbanisation Framework

The Degree of Urbanisation framework is a statistical method used by the United Nations and other agencies to classify settlements by built-up density and contiguity. A modified version of this framework has been applied in India to identify urban settlements outside the existing administrative system.

Functional Urban Settlements and Satellite Methods

Functional urban settlements are areas that operate as urban spaces through continuous built-up activity, commuting links, and service concentration. The new matrix for identifying urban extent uses night-time light methods from satellite sensors, which measure artificial illumination patterns across settlements.

Important Facts for Exams

• The National Institute of Urban Affairs has identified hundreds of functional urban settlements in states such as Kerala and Madhya Pradesh.
• An estimate based on the Degree of Urbanisation framework placed India’s urban population at nearly 84% in 2025.
• The government’s current estimate of India’s urban population is about 36%.
• Tier-2, tier-3, tier-4, and tier-5 cities are under review for a uniform classification for policy and planning purposes.

City Tier Classification

Tier-based city classification is used in India for differentiated planning, investment, and service delivery. The proposed framework also includes a population-based categorisation of tier-1 cities.

Urban Governance Context

Urban governance in India involves the Ministry of Housing and Urban Affairs, state governments, and urban local bodies. The classification of settlements affects census enumeration, municipal planning, infrastructure allocation, and statistical reporting.