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Are India’s small towns being increasingly urbanised?

14 Jan 2026
2 min

Urban Transformation in India

Megacities vs. Small Towns

India's urban narrative is often dominated by megacities, yet a significant transformation is occurring through the growth of small towns. Out of nearly 9,000 towns, only 500 are large cities, with the majority being small towns.

  • The proliferation of small towns is attributed to structural changes in capitalist development and its associated crises.
  • Historically, large cities were centers for industrial production, state investment, and labour absorption.
  • Currently, megacities face challenges of over-accumulation, with issues like inflated land prices, overburdened infrastructure, and rising living costs.

The Emergence of Small Towns

Small towns are increasingly becoming vital nodes in India's urban landscape.

  • Towns such as Sattenapalle, Dhamtari, and Barabanki serve as logistics nodes, agro-processing hubs, and service centers.
  • They absorb migrant workers and rural youth, contributing to the urbanization of rural poverty.
  • The economy is largely informal, with many workers lacking contracts and job security.

Challenges and Policy Gaps

Small towns face significant challenges due to inadequate policy support.

  • India's urban missions are predominantly metro-centric, neglecting small towns.
  • AMRUT and similar initiatives focus on large cities, leaving small towns with fragmented infrastructure support.
  • Municipalities in small towns are typically underfunded and lack the resources for effective governance.

Recommendations for Improvement

Several steps can help address the challenges faced by small towns.

  • Political recognition of small towns as key urban centers is crucial.
  • Planning efforts should integrate housing, livelihoods, transport, and ecology tailored to town-specific needs.
  • Empowerment of municipalities through transparent budgets and inclusive governance is essential.
  • Regulation of platform economies and digital infrastructures is necessary to protect labor rights and ensure local value retention.

Small towns have the potential to be sites of democratic transformation, contingent on political will and effective policy implementation.

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Platform economies

Economic systems where goods and services are exchanged through digital platforms, such as ride-sharing or delivery apps. Regulation is suggested to protect labor rights and ensure local value retention in small towns.

Municipalities

Local government bodies responsible for the administration and provision of public services within a town or city. The article highlights their underfunding and resource constraints in small towns.

AMRUT

Atal Mission for Rejuvenation and Urban Transformation. A scheme by the Indian government focused on improving basic urban infrastructure and services, including water supply, sewerage, and sanitation, in selected cities.

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