Why India’s Urban Future Is Being Written in Small Towns, Not Megacities

India’s urban story is still narrated in the booming language of megacities — metros, corridors, smart cities and skylines. Yet beneath this familiar script, a quieter but far more consequential transformation is underway. Of India’s nearly 9,000 census and statutory towns, fewer than 500 qualify as large cities. The overwhelming majority are small towns with populations under one lakh. Their rapid proliferation is not accidental. It is a structural outcome of India’s capitalist development — and increasingly, of its crisis.

How India moved from metropolisation to small-town urbanisation

From the 1970s through the 1990s, India’s growth model relied heavily on metropolisation. Large cities such as Delhi, Mumbai, Chennai and Kolkata — and later Bengaluru and Hyderabad — became the primary sites for industrial production, state investment, infrastructure creation and labour absorption. These metros functioned as spatial fixes for capitalism: absorbing surplus rural labour, concentrating consumption, and enabling capital accumulation.

Today, that model is fraying. India’s metros face classic symptoms of over-accumulation. Land prices have detached from productive use, infrastructure systems are stretched beyond repair, and the cost of living has become prohibitive for working groups. It is within this structural impasse that small towns have emerged as new sites of urban expansion.

Small towns as the new nodes of accumulation

Across India, towns once seen as peripheral are being folded into national and regional circuits of capital. Places such as Sattenapalle, Dhamtari, Barabanki, Hassan, Bongaigaon and Una are now logistics nodes, agro-processing hubs, warehouse towns, construction economies, service centres and consumption markets.

These towns absorb migrants priced out of metros and rural youth with shrinking agrarian options. They are not outside the urban process; they are deeply embedded within it. What distinguishes them is the condition under which they urbanise: cheaper land, more pliable labour, weaker regulation and far lower political scrutiny.

Why small towns are not an ‘alternative’ to urban crisis

There is a temptation to view small towns as gentler, more inclusive urban spaces — a corrective to the excesses of megacities. The reality is far more sobering. What is unfolding is not inclusive growth, but the urbanisation of rural poverty.

Informal labour dominates these towns: construction workers without contracts, women trapped in home-based piecework, and youth locked into platform economies with no social security. In towns such as Shahdol or Raichur, new hierarchies are crystallising. Real estate brokers, local contractors, micro-financiers and political intermediaries increasingly control land, labour and access to credit.

Small towns thus reproduce inequality, but in more dispersed and less visible forms.

Policy blindness and the metro-centric imagination

India’s urban policy architecture has not kept pace with this shift. Flagship urban missions remain overwhelmingly metro-centric. Programmes such as AMRUT — even in their expanded avatars — effectively exclude most small towns from sustained infrastructure investment. Water supply, sewerage and transport projects are designed with large cities in mind, while small towns survive on fragmented schemes and temporary fixes.

The consequences are predictable. Tanker economies flourish, groundwater is mined indiscriminately, and ecological stress intensifies. Small towns often face worse water insecurity than metros, but with far fewer institutional safeguards.

Governance as the weakest link

If infrastructure is neglected, governance is even more fragile. Small-town municipalities are chronically underfunded and understaffed. Planning functions are frequently outsourced to consultants unfamiliar with local economies and ecologies. Citizen participation is reduced to procedural hearings, rather than meaningful deliberation.

As a result, decisions about land use, housing layouts, transport corridors and industrial siting are made without integrating livelihoods, environmental limits or social equity. The urban future of millions is shaped through administrative thinness rather than democratic depth.

What must change if small towns are India’s urban future

The first requirement is political recognition. Small towns must be acknowledged as the primary frontier of India’s urban transformation, not as residual spaces awaiting “graduation” into cities.

Second, planning needs a fundamental reset. Town-level plans must integrate housing, livelihoods, transport and ecology instead of replicating metropolitan templates ill-suited to local realities.

Third, municipalities need real power — predictable finances, transparent budgets and institutional space for workers’ collectives, cooperatives and environmental actors.

Finally, capital must be disciplined. Platform economies and digital infrastructures operating in small towns require regulation to ensure labour rights, local value retention and data accountability.

India’s urban future is no longer being built only in glass towers and expressways. It is taking shape in small towns — quietly, unevenly and under strain. Whether this transformation deepens inequality or opens pathways to more just urbanisation depends on how seriously policy and politics engage with this overlooked terrain.