India Considering 'Functional Urban Settlements' as a New Urban Classification from 2026

Key Facts

• India currently classifies urban areas mainly as Census Towns and Statutory Towns.
• Functional Urban Settlements are under consideration for official recognition starting with the 2026 Census.
• Identification of these settlements uses satellite night-time light data capturing artificial illumination to define continuous urban activity and extent.
• Estimates using the Degree of Urbanisation (DEGURBA) framework suggest that nearly 84% of India's population resided in urban settlements by 2025, significantly higher than the government's official estimate of about 36%.
• States like Kerala and Madhya Pradesh have hundreds of such functional urban settlements identified.
• Urban classification influences census enumeration, urban governance, municipal planning, infrastructure allocation, and statistical reporting.

Background & Context

India's existing urban classification framework primarily includes:

• Census Towns: Settlements with a population exceeding 5,000, a density greater than 400 persons per square kilometre, and where at least 75% of the male working population is engaged in non-agricultural activities.
• Statutory Towns: Administrative urban local bodies recognized under state law, such as municipalities.

This framework has remained unchanged since 1971 and does not fully reflect the actual urban spread, particularly missing peripheral and peri-urban areas that function as urban but remain administratively rural.

The Degree of Urbanisation framework, developed by the United Nations and adapted in India, uses a statistical method based on population size, density, built-up continuity, commuting flows, and service concentration to identify urban settlements beyond traditional criteria. Night-time light satellite imagery helps map artificial illumination, providing a proxy for continuous human settlements and urban activity.

The new proposed category of Functional Urban Settlements will incorporate these factors to provide a more comprehensive and nuanced understanding of urbanisation, essential for planning and resource distribution.

Why This Matters for Exams / Exam Relevance

The evolving urban classification reflects India's demographic and infrastructural changes, and competitive exams may test candidates on:

• The criteria defining urban settlements including census towns, statutory towns, and new functional urban settlements.
• Differences between official census urbanisation rates and higher estimates using satellite and DEGURBA data.
• The implications of this classification on urban governance, resource allocation, and planning.
• The use of satellite technology and night-time light data in demographic studies.

Points to Remember

• Functional Urban Settlements is a new urban classification proposed for implementation from the 2026 Census onward.
• Identification is based on nighttime satellite illumination indicating continuous built-up areas, commuting patterns, and services.
• The Degree of Urbanisation framework estimates urban population at nearly 84% by 2025, contrasting with the official 36% figure.
• The current census and government definitions include Census Towns (>5,000 population, >400 persons/km² density, 75% non-agricultural male workforce) and Statutory Towns (municipalities).
• Kerala and Madhya Pradesh have substantial numbers of functional urban settlements, highlighting urbanisation beyond conventional boundaries.
• This updated classification affects census enumeration, municipal administration, infrastructure provision, and statistical reporting.