The four-decade-old criteria used to classify Census Towns will not be able to capture the actual scale of urbanisation in India, the Ministry of Housing and Urban Affairs (MoHUA) told a parliamentary committee, arguing that the present rigid definition, which the Registrar General of India (RGI) has decided to continue with despite the Ministry’s objections, does not account for economic and spatial transformations.

A draft report “Census Criteria for Defining Urban Areas” was discussed by the Parliamentary Standing Committee on Housing and Urban Affairs, headed by TDP MP Magunta Sreenivasulu Reddy, on Wednesday (September 16, 2026). The Ministry of Housing and Urban Affairs, while deposing before the panel, said the old “rural-urban” binary was outdated and inadequate because of the diversity and complexity of economic activity.

The Economic Advisory Council to the Prime Minister (EAC-PM) argues that the country’s urbanisation level could have been as high as 63% in 2015 based on satellite data — more than double the official Census 2011 estimate of 31%. According to the 2011 Census, out of the total population of 121 crore, around 83.3 crore Indians or nearly 68.8% of people are living in rural areas, while 37.7 crore people or 31.2% of the population reside in urban areas.

A Census Town is defined as a village with a minimum population of 5,000, at least 75% of the male working population engaged in non-agricultural pursuits, and a population density of at least 400 persons per sq. km. The definition has remained unchanged since 1981.

Uniform national thresholds

In a communication to the RGI in February 2024, the Ministry had flagged several issues with the continued use of the 1981 definition. It objected to uniform national thresholds, saying they disadvantaged hilly and north-eastern States. The Ministry also questioned the “male bias”, where only the male working population was being used as a parameter to define a town. The female workforce participation should also be utilised, it said. 

The Ministry also said population density was calculated using administrative boundaries rather than built-up areas, resulting in misclassification of settlements. It proposed greater use of satellite imagery and suggested a “transitional areas” category to better capture rapidly urbanising regions.

The MoHUA further argued that the binary rural-urban classification overlooked peri-urban settlements and growth corridors that functioned like urban areas. It said the current system, based on data from the previous Census, could lead to both exclusion and inclusion errors.

However, the RGI maintained that it was too late to alter the framework for Census 2027, as enumeration blocks, boundaries, training and field deployment depending on the rural-urban classification being finalised in advance. The RGI also noted that while the Ministry had flagged several concerns, it had not provided an objective and quantifiable alternative definition.

The Ministry proposed that urban classification could be undertaken after data collection through a common questionnaire, but the RGI informed the committee that such a shift was not feasible for the upcoming Census. It added that the issue could be examined in future digital censuses as electronically available data might enable quicker updating of Census Town classifications.

Observing that the issue had significant implications for planning and governance, the committee, according to sources, said while any immediate change might not be feasible, that at least for a future census exercise, the government should evolve an updated criteria after necessary consultations. 

The draft report which was to be adopted has been deferred, with many members opining that it needs further study.