Does India still live in villages?

Yogesh Upadhyaya
7 min readOct 8, 2020

Mahatma Gandhi said, “India does not live in its towns but in its villages.” He said this nearly a hundred years ago and it seems to be true even today if you look at the last census data. But the picture changes quite a bit when you dig deeper. Many habitations that are called villages have all characteristics of towns. What’s more, majority of Indian population may be urban if you consider alternate definitions of city / town. Also, India’s urbanization might be very different from what is commonly perceived. In this series on population in India, I want to look at what does urban and rural mean in the country.

Image only for representational purposes. By BANITA TOUR from Pixabay

Let us first understand why the extent of urbanization matters.

Why does it matter?

When I think of a city, I think of many people, living close together. Whereas, when I think of villages, I think of people engaged in agriculture and being less prosperous. This is generally true and has many economic and social implications.

It is more viable for a business to provide products and services in a city than it is to provide those in a village, especially a small village. A tribal village that I visit — Palsunda — has around 100 households. There are more apartments in my building! A person running a grocery store in Palsunda can expect very few customers per day. This limits the products that the grocery store offers as I have argued in this piece. But that’s not all. Not only does a business in village have less customers, the customers also have less money.

Agriculture generates much lesser income than industry and services. So, people in villages usually have lesser disposable income. Our hypothetical grocery store owner not only has fewer potential customers, but also finds that their spending capacity is limited. For example, a poor person in Palsunda may buy only fifty grams of the cheapest tea whereas an apartment dweller in Thane would choose a kilo pack of an established brand.

In addition to the size and density of population, distance from a big city also matters economically. Villagers can find higher paying jobs in a city more easily if they live close to it. Even farmers do not have to spend too much on transporting their produce to the mandis in the city, if it is not too far from the village.

The low population and population density can mean that there are many differences in social infrastructure in a village too. For example, in many small villages, schools are tiny. Because there may be less than ten people in each grade, sometimes even less than 5, it is not uncommon for one room to be used for three different grades. And all three grades being run by a single teacher. Another example — there may not be a single doctor in the whole village. Or, that many distant villages together may be served by a single police station. This and many other factors can make the culture of a village very different from that of a city.

Are all the villages in India, small sparsely populated, engaged in agriculture and far away from big cities? To answer this, we need to know how India decides which habitation is a city and which is a village.

How does India classify a place as village / town?

India is perhaps the only country in the world to use all three criterion — total population, density of population and occupation — to classify a habitation as a town. In the Census, which is conducted every ten years, a habitation is called a town if

· More than 5,000 people live in the habitation. And,

· The density of population is more than 400 / square kilometer. And,

· At least 75% of the male workforce is engaged in non-farm work.

By this definition in 2011, 31.2% of our population was urban. The Census also saw a very sharp increase in the number of Census Towns (CT) or Out Growths (OG). From 1,362 in 2001 census to 3,894 settlements. CTs and OGs are places which are urban by the three definitions given above but are governed as villages. That is, they are governed by Gram Panchayat rather than one of the variations of a municipal corporation.

Why are habitations that have more than 5,000 people living at a high density and not engaged in agriculture still called villages? A state government has to designate a habitation as a town and many state governments do not do that. This may be because people living in the habitation do not want it to be called a town. Many government schemes are targeted at villages and if your habitation becomes a town, then you would be deprived of the benefit of those schemes. MNREGA, the rural employment guarantee scheme, is one prominent example. There are other examples of benefits of being a villager, like cheaper electricity and subsidies for construction of homes. Additionally, residents may not want their village to become a town because they may perceive that they may be subjected to extra regulations, especially those that apply to construction.

The residents may also not want their village to become a town because they may not perceive any advantage of this change. They may see towns nearby which are not governed well. This is especially so in many small towns in India where, because of poor municipal capacities and lack of money, the local government may not provide anything to the citizens in terms of water, solid waste management or sanitation services.

The local politicians also may not want a change in status as they may perceive that urban elections may be costlier. State governments may not want to a village to become a city because they would need to spend more on creating and running urban infrastructure. All these factors have been covered brilliantly in this paperfrom Partha Mukhopadhyay and others.

Given this situation, it is very possible that a habitation designated as a village has a population in tens of thousands. As this paper points out, “According to the 2011 Census, the population of census towns ranges from as low as 211 to as high as 6,37,272, with the average being 13,942.”

What happens if we relax the criterion for calling a habitation a town?

Extent of urbanization if we choose alternate definitions

Tandel and others calculated how much of India would be urban if we use alternate criterion for defining a habitation as town and this is what they found.

As can be seen, if we took the definition that is used by many countries — if a habitation has more than 2,500 people it is urban — then two thirds of India would be considered urban! Remember, the data is from 2011 census and India would have become even more urban in the last decade.

There are other reasons to not classify all of rural India as a monolith. Partha pointed that even in 2001, 52% of India lived an hour’s distance from a large city whereas the comparable figure for China around the same time was only 36%.

There are reasons to consider the alternate definitions seriously. As Neelkanth Mishra argues in this piece, in 2013, “Fifty-five per cent of India’s manufacturing output comes from rural India. Seventy-five per cent of all manufacturing plants that started in the last decade started in rural India.”

Last but not the least point — Unlike, China it seems that India is urbanizing by not mainly making its existing cities bigger but by developing new urban centers in what were villages. As Partha points out, nearly a third of the increase in urban population comes from increase between 2001 and 2011 came from the small Census towns far away from big cities. It seems that a lot of urbanization in India is happening in newly emerging towns rather than in big cities.

India has more than Six Hundred Thousand villages. That is, India has more villages than more than 50 countries have people. These villages are scattered over very different geographies. From the fertile plains of UP and Bihar, to the plateau of South, to the desert in the west to really small settlements in Himalayas. It does not make sense to treat rural India has one monolith. This is especially so if you realize that what we call a village in India may be a town in many other countries in the world!


· How much of India is rural or urban is important because that is a significant determinant of economic growth. This is because

o Small and scattered populations cannot support too many products or services businesses. This is one reason that cities generate more and more of the national income and higher paid employment.

o A lot of rural employment is in agriculture and agriculture is becoming a progressively smaller part of the total income of the country.

· Many habitations in India are classified as rural even though they must be classified as urban even by the strict definition that India uses. This is because many times neither the residents not the state governments are interested in changing the governance structure from Gram Panchayat to Urban Local Body (ULB).

· India follows a very strict definition of classifying a habitation as urban. By alternate

definitions, more than two third of Indian population is already urban.

· One needs to be very careful while talking about ‘rural India’, especially in economics. A large part of manufacturing comes from what are classified as rural areas.

· India’s pattern of urbanization is different from many other countries, especially China. A lot of new urbanization comes from new centers and not from existing large cities.



Yogesh Upadhyaya

Entrepreneur. Economist. Investor. Actor. Technophile. Policy wonk. Comedian. I love to explore places where these worlds intersect.