The issue of labeling settlements as “urban” and “rural” has important policy implications in India since the label determines the local governance structure (panchayat or urban local body) and the allocation of resources under government schemes. Policymakers often work on the faulty assumption that “rural” is a proxy for “poor” and accordingly spend greater resources on provisioning of public goods in areas defined as “rural”. However, the current classification uses a combination of administrative definition and census criteria which are often inadequate in capturing speed and scale of urbanization in India.
