Are India’s Small Towns Being Increasingly Urbanised?

India’s urban discourse is often dominated by megacities like Delhi, Mumbai, and Bengaluru. However, a quieter but more significant transformation is underway in its small towns. Of nearly 9,000 towns in India, only about 500 qualify as large cities. The majority are small towns that are increasingly becoming the new frontiers of urbanisation. This reflects a shift in the spatial pattern of economic growth, labour absorption, and urban expansion.

Megacities vs Small Towns: A Structural Shift

Limits of Megacity-Centric Growth

Historically, large cities were centres of:

• Industrial production

• State investment

• Labour absorption

Today, many megacities face a crisis of over-accumulation:

• Escalating land and housing prices

• Overburdened infrastructure

• Congestion and pollution

• Rising cost of living and social inequality

These pressures reduce their capacity to absorb new migrants and economic activities.

Emergence of Small Towns as Growth Nodes

Small towns are filling this vacuum by acting as:

• Logistics and transport nodes

• Agro-processing and market hubs

• Service centres for surrounding rural areas

Examples such as Sattenapalle, Dhamtari, and Barabanki illustrate how small towns connect agriculture, local trade, migration, and services, making them vital to India’s evolving urban economy.

Small Towns and the Urbanisation of Rural Poverty

Absorption of Migrants and Rural Youth

Small towns increasingly absorb:

• Migrant workers

• Displaced agricultural labour

• Rural youth seeking non-farm livelihoods

This process does not eliminate poverty but urbanises it, shifting vulnerability from villages to small urban settlements.

Informalisation of the Economy

The economic base of small towns is largely informal:

• Casual and contractual employment

• Absence of social security

• Dependence on platform and gig-based work

• Weak labour protections

Urbanisation here is driven more by survival than by prosperity.

Policy Blind Spots and Governance Challenges

Metro-Centric Urban Policies

Most national urban missions focus on large cities:

• AMRUT

• Smart Cities Mission

• Metro rail and mega infrastructure projects

Small towns receive fragmented and inadequate support, despite hosting a large share of India’s urban population.

Weak Municipal Capacity

Municipalities in small towns suffer from:

• Low revenue base

• Limited fiscal autonomy

• Shortage of trained staff

• Poor planning and implementation capacity

This undermines effective governance and service delivery.

Why Small Towns Matter for India’s Urban Future

Small towns:

• Act as buffers against megacity overcrowding

• Promote regional economic balance

• Reduce migration pressure on large cities

• Serve as engines of decentralised development

They represent a more spatially equitable model of urbanisation.

Policy Recommendations

1. Political and Policy Recognition

• Acknowledge small towns as key urban centres, not transitional settlements.

• Frame a dedicated Small Towns Urban Mission.

2. Integrated Urban Planning

Planning must combine:

• Housing

• Livelihoods

• Transport connectivity

• Ecological sustainability

• Public services

Tailored, town-specific plans are essential.

3. Strengthening Municipal Governance

• Increase financial devolution

• Ensure transparent and participatory budgeting

• Build technical and administrative capacity

4. Regulating Platform Economies

• Protect labour rights in gig and digital work

• Ensure local value retention

• Prevent extraction by external digital monopolies

Conclusion

India’s small towns are indeed becoming increasingly urbanised, not merely in demographic terms but as critical economic and social spaces. They are shaping a new form of urbanisation driven by informal labour, logistics networks, and agro-linked economies. However, without political recognition, institutional empowerment, and targeted policy frameworks, this transformation risks deepening inequality and precarity. If supported effectively, small towns can emerge as sites of democratic, inclusive, and decentralised urban transformation, redefining India’s urban future beyond megacities.