In this Idea's for India column, Visiting Fellow Mudit Kapoor, Senior Associate Vaidehi Tandel and Consulting Senior Associate Komal Hiranandani, argue that alternative definitions of 'urban' are better suited than the administrative definition used by the government to determine policies like eligibility for Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA).

"State governments ultimately determine the administrative status of settlements. The default category of a settlement is rural and it becomes urban only after the state government converts it following a requisite legal process. Although there are guidelines that propose population and other criteria in order for settlements to be governed as urban, these are not binding on state governments. As a result, the decisions to convert settlements from rural panchayats to urban local bodies can be arbitrary and may vary across states. There may even be pressures or incentives (such as being able to access rural schemes) to not convert settlements to the urban category, even when they are de facto urban in nature...

The Census of India acknowledges the existence of settlements that are de facto urban but are governed as rural by creating a category called “Census towns” to identify such settlements... However, contrary to common perception, even the Census uses discretion in actually identifying these towns. The Census includes these Census towns together with settlements that are urban as per the administrative definition in its definition of urban...

As a counterpoint to the administrative definition and the census definition of urban, we study how the scenario would change if India used a population criterion of 5,000 or a population criterion of 2,500 for defining urban. These definitions are used by countries such as Ghana, Qatar, Mexico and Venezuela...

... establish[ing] a link between urbanisation and socioeconomic indicators, and one way to assess the suitability of various urban definitions is to examine the relationship of urbanisation rates using different definitions with these socioeconomic indicators. In a system that justifies special treatment to rural areas because they are thought to be more deprived or agrarian, an examination of the relationship between the chosen definition and development or agricultural indicators is warranted...

We conduct a state-level comparison of the relationship between urbanisation rates as measured by the administrative, Census, and alternative definitions, and poverty rates, per capita net state domestic product, and share of working population engaged in agriculture and cultivation...

Using inaccurate definitions of urban and rural can be costly since, among other reasons, these categories are used as the basis for determining eligibility for various state and central government schemes, and standards of public goods and services delivery...

...the results present a strong case that alternative definitions of urban are better suited than the administrative definition to reflect the urban character of settlements in India...

...there is [sic] merit in moving towards a more accurate and general definition of urban since characteristics such as population and population density themselves alter the nature of places and prospects of their residents, justifying the need to treat places differently. Hence, while we adapt and reduce reliance on urban-rural categorisation, it is also important to recognise and fix the flaws in India’s current method of defining urban areas." 

Read the full post here. 

Read the Working Paper here.