Urbanisation and Migration in India: Trends, Problems and Policies for RBI Grade B ESI

Last updated: 2026-11-11 · MockMentor

"Urbanisation and Migration" is part of the Social Structure in India unit of the RBI Grade B Phase 2 Economic and Social Issues (ESI) syllabus. Cities produce most of India's output, and people moving from villages to towns and from poorer to richer states are reshaping its economy and society. Questions ask about the pace and pattern of urbanisation, the problems of Indian cities, the policies to address them and the condition of migrant workers, an issue brought to national attention by the lockdown of 2020.

In one line: India is urbanising steadily but less than its income level would suggest, its cities struggle with housing, transport, water and finance, and its migrants, mostly internal and many seasonal, need portable rights and services.

Basic concepts

• Urbanisation: the increase in the share of a country's population living in urban areas, through natural growth, migration and the reclassification of rural areas as urban.
• Statutory town: a place with a municipality, corporation, cantonment board or notified town area committee.
• Census town: a place that is not a statutory town but meets three conditions: a population of at least 5,000, a density of at least 400 persons per square kilometre, and at least 75% of male main workers engaged outside agriculture.
• Urban agglomeration (UA): a continuous urban spread made up of a town and its adjoining outgrowths, or two or more adjoining towns.
• Outgrowth (OG): a settlement such as a railway colony or university campus next to a town, with urban features, but outside its statutory limits.
• Migration: the movement of people from one place to another for a change of residence, for a short or long period.
• Circular (seasonal) migration: repeated movement between home and work places, such as farm workers who go to cities for construction work in the off-season.

Why in News?

1. The Economic Survey 2025-26 called for unlocking urban land, transit-oriented development, congestion pricing and stronger municipal finances to make cities engines of growth.
2. The Union Budget 2026-27 provided ₹5,000 crore each over five years for city economic regions and an incentive of ₹100 crore for municipal bond issues above ₹1,000 crore.
3. Census 2027 will give the first new count of urban population and migration since 2011.

Urbanisation in India

Key facts from Census 2011

India's urban share is now estimated at about 36%, still well below China (over 60%) and the world average (over 55%). Many experts argue that the true figure is higher, because many large villages already have urban features but are still governed as rural areas.

Trends

Related phenomena

Why India urbanised

1. Industrialisation and the growth of services in cities.
2. Rural poverty, small landholdings and lack of non-farm jobs, which push people out.
3. Better education, health care and amenities in cities, which pull people in.
4. Natural increase in urban population.
5. Reclassification of villages as census towns as they grow.
6. Infrastructure such as highways, railways and industrial corridors.

Urbanisation and rural areas

Urbanisation affects villages through remittances from migrants, rising demand for farm produce and milk, the spread of urban lifestyles, the conversion of farmland near cities, and in some cases the loss of young workers, leaving older people and women to run farms.

Problems of urbanisation

Weak urban governance

The 74th Constitutional Amendment Act, 1992 gave constitutional status to urban local bodies and listed 18 functions in the Twelfth Schedule that states should transfer to them. In practice, many states have not transferred these functions, funds and staff. Municipal revenues are about 1% of GDP in India, far lower than in other large economies. Property tax collection is poor, and most cities depend on grants from the state. Many mayors have little real power, with power resting with state-appointed commissioners and parastatal agencies.

Government initiatives

Way forward for cities

1. Governance: empower urban local bodies with functions, funds and staff as the 74th Amendment intended; directly elected mayors with real powers.
2. Financing: better property tax collection, land value capture, municipal bonds and a fair share of state revenues.
3. Planning: master plans that integrate land use and transport; transit-oriented development with higher density near metro and bus corridors.
4. Affordable housing: rental housing, in-situ slum upgradation and easier rules for building.
5. Inclusive cities: services for migrants and the urban poor, including health, schooling and rations.
6. Sustainability: climate-resilient drainage, protection of lakes and wetlands, clean transport and waste management.
7. Capacity building: trained urban planners and engineers in municipal bodies.

Migration

Forms of migration

India's internal migration

According to Census 2011, about 45.4 crore Indians (37% of the population) were internal migrants by place of last residence. The largest stream is rural to rural, mostly women moving after marriage. Among men, work is the main reason. The Periodic Labour Force Survey of 2020-21 found a migration rate of about 28.9%.

Uttar Pradesh and Bihar are the largest sources of inter-state migrants, and Maharashtra, Delhi, Gujarat, Tamil Nadu and Karnataka are the main destinations.

India is also the largest source of international migrants in the world, with about 1.8 crore Indians living abroad, and the largest receiver of remittances, which were about US$135 billion in 2024-25 according to RBI.

Reasons for migration

Consequences of migration

Migration often reduces poverty for migrant households, but can increase inequality between regions, since better-off and more educated people are more likely to migrate for good jobs.

The 2020 migrant crisis

During the national lockdown from March 2020, millions of migrant workers lost their jobs and shelter in cities and tried to return home, many on foot. The crisis exposed the lack of data on migrants, their exclusion from social security, and the absence of portable benefits.

Measures for migrants

Way forward on migration

• Collect regular data on migration through the census, PLFS and the e-Shram database.
• Make welfare portable: rations, health insurance, pensions and school admissions that follow the migrant.
• Ensure decent housing, wages and safety for migrant workers in cities.
• Create jobs in source states to reduce distress migration.
• Fight discrimination against migrants through law and awareness.

Possible exam and interview questions

1. Why is India's level of urbanisation low for its income level? Discuss the main problems of Indian cities and the steps needed to solve them. (420 words)
2. "Migration is both a cause and a consequence of development." Examine with reference to internal migration in India. (620 words)
3. Distinguish between a statutory town and a census town. Why does the distinction matter?
4. What did the migrant crisis of 2020 reveal about the condition of migrant workers in India?
5. Interview: Should mayors of large Indian cities be directly elected with real executive powers?

Related reading: demographic trends, employment generation, and sustainable development.

More in ESI

• National Income
• Human Development
• Poverty
• Employment
• Sustainable Development

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