Make the case for a National Urbanisation Policy built on the rural–urban continuum. What fiscal and institutional mechanisms should it include?

India counts a place as "urban" only if a State notifies it or it meets three Census tests: population ≥5,000, density ≥400/sq km and ≥75% of male workers in non-farm work. Yet on the World Bank's Agglomeration Index, 55.3% of Indians lived in urban-like areas in 2010, against an official share of about 31% [1]. A National Urbanisation Policy (NUP) built on the continuum can close this gap between counting and governing.

The case for a continuum-based NUP

• Hidden urbanisation: the rural/urban binary misses sprawl onto land still recorded as rural. Census 2027 keeps the 2011 definitions, so the undercount will persist.
• Governance limbo: 3,892 census towns (2011) are counted as urban but run by gram panchayats [2]. MoHUA's 2026-27 grants analysis flags sprawl and unregulated development in census towns and peripheral areas [3].
• Planning deficit: 65% of India's 7,933 urban settlements have no master plan [2].
• Fiscal mismatch: urban grants flow to notified ULBs, so undercounted places get rural-scale funds for urban-scale needs.
• Arbitrariness: notification is a State's choice, so similar settlements are classified differently across States.

Fiscal mechanisms

• Scale up the Urbanisation Premium: FC-16's one-time ₹10,000 crore grant pays for merging peri-urban villages into ULBs and framing a Rural to Urban Transition Policy [4]. It should become recurring and linked to performance.
• Transition grants for newly notified towns, to cover the years before their own revenue base (e.g. property tax) matures.
• Continuum-weighted devolution: State Finance Commissions should use density and non-farm indicators, not legal status alone.

Institutional mechanisms

• Dual Census count: keep the 2011 series for comparability and publish a parallel continuum-based estimate.
• Rule-based notification: a census town that crosses set thresholds is automatically reviewed for ULB status.
• 3Fs devolution: CAG found 45% of sanctioned ULB posts vacant in Telangana [5]. New ULBs need recruitment powers and real Twelfth Schedule functions.
• Planning capacity: send NITI Aayog's recommended 8,268 lateral-entry planner posts [2] first to newly merged and newly notified areas.
• Regional planning: activate District and Metropolitan Planning Committees (Articles 243ZD–243ZE) for peri-urban belts.

Urbanisation in India is a gradient, not a switch, and governance must follow that reality. An NUP that pairs continuum-based measurement with predictable funds and empowered ULBs would deliver the 74th Amendment's promise of local self-government and advance SDG 11 on inclusive, sustainable cities.