Urbanisation, Housing Deficit & Slum Rehabilitation in India

India's Urbanisation Trajectory

India's urban population has grown steadily over the past century, though the pace of urbanisation has been slower than comparable economies at similar income levels.

India's urban population surpassed 50 crore by the early 2020s, making it one of the world's largest urban populations in absolute terms. Urban population growth was approximately 2.3% per year in 2024.

UN Projections: India is expected to add approximately 416 million urban residents between 2018 and 2050, the highest absolute increment in urban population of any country — exceeding even China's projected urban growth.

Definitions: Urban India

India uses multiple definitions of "urban" for administrative and analytical purposes:

The Census 2011 counted 7,935 towns (including Census towns) and 475 Urban Agglomerations. The explosive growth of Census towns (from 1,362 in 2001 to 3,894 in 2011) was a striking finding — much of India's urbanisation was occurring in settlements not yet formally recognised as urban.

Push and Pull Factors of Rural-Urban Migration

Push factors (conditions in rural areas that drive out-migration):

• Agricultural distress (droughts, crop failures, declining farm incomes)
• Land fragmentation; excess agricultural labour
• Limited access to quality education and healthcare in rural areas
• Social discrimination (caste, gender)
• Natural disasters and climate-related vulnerabilities

Pull factors (conditions in urban areas that attract migrants):

• Higher wage employment in manufacturing and services
• Better educational and health infrastructure
• Social mobility; escape from caste hierarchies
• Access to markets and economic opportunities

The Urban Housing Crisis

Housing Shortage

India faces a chronic housing deficit, particularly in the lower-income segments. Based on a technical group report for the 12th Five Year Plan, urban housing shortage was estimated at 1.87 crore units — with 96% of the shortage affecting EWS (Economically Weaker Section) and LIG (Low Income Group) households.

Housing shortage is driven by:

• Rapid population growth in cities
• Unaffordable formal housing (land prices, construction costs)
• Weak rental market (archaic Rent Control Acts discourage supply)
• Inadequate serviced land for housing
• Slow urban local body planning and approval processes

Slums

Census 2011 Definition: A slum is a compact area of at least 300 people or about 60-70 households living in poorly built, congested tenements in unhygienic conditions, usually with inadequate infrastructure and lacking proper sanitary and drinking water facilities.

As per Census 2011, 65.49 million people lived in slums in India, accounting for 17.4% of the urban population. India had 33,510 slum localities across 2,613 towns in 2011.

Key Urban Housing Schemes

Pradhan Mantri Awas Yojana — Urban (PMAY-U)

PMAY-U 1.0 was launched in June 2015 under the "Housing for All by 2022" mission. It aimed to provide affordable housing to urban poor through four verticals:

PMAY-Urban 2.0 (Launched September 2024)

The Union Cabinet approved PMAY-U 2.0 with effect from 1 September 2024, targeting 1 crore families over 5 years with an investment of ₹10 lakh crore (Central assistance of ₹2.50 lakh crore).

Four verticals under PMAY-U 2.0:

1. Beneficiary Led Construction (BLC) — for EWS families with own land; also covers landless beneficiaries (states to provide land rights/pattas)
2. Affordable Housing in Partnership (AHP) — state partnerships with developers
3. Affordable Rental Housing (ARH) — new vertical targeting urban migrants and working class in rental accommodation
4. Interest Subsidy Scheme (ISS) — 4% interest subsidy on first ₹8 lakh of home loans up to ₹25 lakh for EWS/LIG/MIG; house value ceiling of ₹35 lakh; loan tenure up to 12 years

Income eligibility:

• EWS: annual income up to ₹3 lakh
• LIG: ₹3–6 lakh
• MIG: ₹6–9 lakh

As of February 2026, the CSMC (Central Sanctioning and Monitoring Committee) approved an additional 2.88 lakh houses under PMAY-U 2.0.

Earlier Scheme: Rajiv Awas Yojana (RAY)

Rajiv Awas Yojana (2009-2014 pilot, 2013 onwards) was the predecessor scheme focused specifically on slum-free cities. It envisioned bringing all existing slums within the formal system and creating conditions for a slum-free India. RAY was subsumed under PMAY-U in 2015.

Smart Cities Mission

Launched in June 2015, the Smart Cities Mission aims to promote cities that provide core infrastructure, clean and sustainable environment, and a quality of life to their citizens through the application of smart solutions.

The Mission has been critiqued for focusing on physical infrastructure over inclusive development and for neglecting the needs of the urban poor and slum dwellers.

AMRUT 2.0 (Atal Mission for Rejuvenation and Urban Transformation)

AMRUT 2.0 was launched in October 2021 to make cities self-reliant in water and begin moving towards a circular economy. It covers 500 cities (compared to AMRUT 1.0's 500 cities launched in 2015).

Focus areas: Universal coverage of water supply and sewage connections, rejuvenation of water bodies, green spaces, peri-urban areas, and reducing non-revenue water.

Urban Governance: 74th Constitutional Amendment

The 74th Constitutional Amendment Act, 1992 gave constitutional status to Urban Local Bodies (ULBs) — Municipalities and Municipal Corporations. Key provisions:

• Mandates elections to municipal bodies
• Three-tier structure: Nagar Panchayat (transitional areas), Municipal Council (smaller urban areas), Municipal Corporation (large cities)
• 12th Schedule lists 18 functions that may be transferred to municipalities (though actual transfer depends on state legislation)
• Reservation of seats for SC/ST and women (at least 1/3rd)
• Constitution of State Finance Commissions (on lines of Central Finance Commission) to devolve funds to ULBs
• District Planning Committee and Metropolitan Planning Committee for integrated planning

Urban Challenges

The Economic Survey 2025-26 specifically flagged long-standing supply-side challenges in land, housing, and transport as key sources of urban stress constraining India's economic potential.

Recent Developments (2024–2026)

PMAY-Urban 2.0 — Launched September 2024

The government launched PMAY-Urban 2.0 in September 2024, with a target of constructing 1 crore houses for the urban poor (EWS/LIG/MIG categories) over 5 years with central government assistance of ₹2.30 lakh crore. PMAY-Urban 1.0 (2015–2024) sanctioned approximately 1.18 crore houses, of which ~85 lakh were completed. PMAY-U 2.0 introduces a beneficiary-led construction (BLC) component where families build their own homes on individual plots with government financing, and an affordable rental housing component for migrant workers. Key eligibility: income up to ₹9 lakh per annum (EWS: up to ₹3 lakh; LIG: ₹3–6 lakh; MIG: ₹6–9 lakh). The Urban Housing Shortage was last officially estimated at 18.78 million units (Urban Housing Technical Group, 2012); informal estimates suggest it may now exceed 20 million units given population growth and migration since 2011 Census.

UPSC angle: Prelims — PMAY-U 2.0 launched September 2024; 1 crore houses; ₹2.30 lakh crore central outlay; BLC component; affordable rental housing for migrants. Mains (GS1/GS2/GS3) — urban housing deficit and slum proliferation; PMAY implementation challenges (land title, contractor fraud); rental housing gap; 74th Amendment and ULB role in slum rehabilitation.

Smart Cities Mission Concluded — Urban Governance Lessons (March 2025)

The Smart Cities Mission officially concluded on 31 March 2025, with 94% of 8,067 projects completed (₹1,51,361 crore invested). The mission's Special Purpose Vehicle (SPV) model — bypassing elected ULBs — drew criticism for weakening urban democracy: infrastructure was built but not maintained by municipalities lacking capacity or budget. Post-mission evaluation by the Ministry of Housing and Urban Affairs (MoHUA) flagged: (i) ICCCs (Integrated Command and Control Centres) in all 100 cities are functional but need operational cost mainstreaming into municipal budgets; (ii) projects tended to benefit high-income areas more than slums; (iii) 74th Amendment's 12th Schedule functions remain inadequately devolved to ULBs even as smart infrastructure is handed over. AMRUT 2.0 (2021–26) continues with ₹2.77 lakh crore for water supply, sewerage, and drainage across 500+ cities.

UPSC angle: Prelims — Smart Cities Mission concluded March 31, 2025; 94% projects completed; 100 cities; ICCCs. Mains (GS1/GS2) — SPV model and urban democracy tension; 74th Amendment implementation gap; smart city benefits concentrated in affluent areas; comparison of Smart Cities vs AMRUT as urban development models.

Bengaluru Urban Flooding — Lake Encroachment and Slum Vulnerability (2022–2024)

Bengaluru's catastrophic flooding in September 2022 and October 2023 — which submerged the IT corridor, residential colonies, and arterial roads — exposed the direct link between urban expansion onto wetland and floodplain systems and disaster vulnerability for slum populations. The IISc Expert Committee Report (2023) found that over 65% of Bengaluru's lake catchment areas had been encroached upon, with storm water drains (rajakaluves) extensively blocked by construction. Slum settlements, concentrated on former lake beds and drainage channels, bore the highest flooding impact while having zero compensation or reconstruction support. Chennai's repeat floods in 2023–24 replicated the same pattern (Pallikaranai marsh encroachment). NDMA's Urban Flood Management Guidelines 2024 require all state capitals and cities above 5 lakh population to create a Stormwater Drainage Master Plan integrated with land-use zoning.

UPSC angle: Prelims — NDMA Urban Flood Management Guidelines 2024; Bengaluru lake encroachment 65%; IISc Expert Committee Report 2023. Mains (GS1) — urban poor as disproportionate disaster victims; wetland governance failure and urban flooding; slum location and hazard exposure; urban governance failure in managing natural drainage systems.

PMAY-Urban 2.0 Progress — 13.61 Lakh Houses Sanctioned (2025–2026)

By early 2026, PMAY-Urban 2.0 had sanctioned a cumulative 13.61 lakh houses (1.361 million). The 4th Central Sanctioning and Monitoring Committee (CSMC) meeting (August 2025) approved an additional 1.47 lakh pucca houses across 14 states and UTs, taking the running total to over 8.56 lakh at that point. The scheme has emphasised social inclusion: 75,417 houses sanctioned specifically for women (including single women and widows); 32,551 for SC beneficiaries; 5,025 for ST beneficiaries; and 58,375 for OBC beneficiaries. Uttar Pradesh sanctioned 1,166 houses for senior citizens under the scheme.

The Angikaar 2025 campaign (launched under PMAY-U 2.0) focused on community mobilisation and awareness, particularly targeting first-generation urban settlers in slum areas. The transition from PMAY-Urban 1.0 to 2.0 also introduced Affordable Rental Housing for migrant workers and urban poor — addressing a gap identified after the COVID-19 reverse migration crisis. Combined PMAY (Urban + Rural) totals: over 1.2 crore houses sanctioned, of which approximately 94 lakh (93.81 lakh) have been completed and handed over to beneficiaries.

UPSC angle: Prelims — PMAY-U 2.0: 13.61 lakh houses sanctioned (early 2026); Angikaar 2025 campaign; affordable rental housing component; combined PMAY 1.2 crore sanctioned, 94 lakh completed. Mains (GS1/GS2) — urban housing as social justice (SC/ST/women focus); Angikaar as community mobilisation; rental housing gap for migrants; PMAY-U 2.0 vs 1.0 design improvements.

Exam Strategy Note

For GS1 Mains, urbanisation intersects with migration (GS1 population), inequality, housing rights (Directive Principles), and social stratification. For GS2, urban governance (74th Amendment, ULBs, SPVs) is directly relevant. For GS3, urban infrastructure, smart cities, and PMAY connect to economic development. Always use current data — Census 2011 is the last Census, but World Bank and UN projections are reliable for current estimates. PMAY-U 2.0 (September 2024) is the current scheme — ensure answers reflect the 2.0 structure.

Key Terms

Urbanisation

• Definition: The process by which an increasing proportion of a population comes to live in towns and cities, driven by rural-to-urban migration, natural increase in urban populations, and reclassification of rural areas as urban.
• Origin: India's urbanisation accelerated post-1991 liberalisation; 2011 Census recorded 31.2% urban population; Census 2011 found 377 million urban residents.
• UPSC: India's Urban Transition — Census Urban Areas (CUA) include Municipal Corporations, Municipalities, Census Towns, and Notified Area Committees; "Census Town" definition (5,000+ population, 75%+ male non-agricultural workers, 400+ persons/sq km density).

Slum

• Definition: A heavily populated urban area characterised by substandard housing, inadequate access to safe water and sanitation, insecure residential status, and overcrowding — as defined by the UN-Habitat.
• Origin: UN-Habitat definition (2003) uses five deprivation criteria; India's Census counts notified and non-notified slums; ~65 million slum dwellers per 2011 Census.
• UPSC: Distinction: notified slum (declared by local government) vs non-notified (unrecognised); PMAY-U Beneficiary Led Construction (BLC) and In-Situ Slum Redevelopment (ISSR) components specifically address slums.

Smart Cities Mission

• Definition: A Government of India initiative (2015–2025) to develop 100 selected cities as models of urban liveability, sustainability, and technological governance through Area-Based Development (ABD) and Pan-City Solutions.
• Origin: Launched June 2015; cities selected through a competitive challenge process; Special Purpose Vehicles (SPVs) created at city level to implement projects; officially concluded March 31, 2025 (final deadline after multiple extensions from original 2020 target).
• UPSC: Closed mission — 93% of ~8,067 projects completed (₹1.5 lakh crore); but only 18 of 100 cities fully completed all projects; all 100 cities have functional ICCCs (Integrated Command and Control Centres); key criticism: SPV model bypassed elected ULBs; benefits concentrated in affluent areas; 74th Amendment functions remain inadequately devolved.

AMRUT (Atal Mission for Rejuvenation and Urban Transformation)

• Definition: A government scheme providing basic urban infrastructure — water supply, sewerage, urban transport, parks — launched in two phases; AMRUT 2.0 (2021-22 to 2025-26) covers all 4,378+ statutory towns for water supply (household tap connections).
• Origin: AMRUT 1.0 launched 2015 replacing JnNURM covering 500 cities (≥1 lakh population); AMRUT 2.0 launched October 2021 expanding water supply mission to all statutory towns; total outlay ₹2.99 lakh crore; terminal year 2025-26.
• UPSC: Key distinction — AMRUT 2.0 covers all 4,378+ towns for water supply (not just 500); sewerage component remains 500 AMRUT 1.0 cities; focus on achieving 100% tap water coverage; contrast with Smart Cities (concluded) vs AMRUT (ongoing till 2025-26).

Pradhan Mantri Awas Yojana — Urban (PMAY-U)

• Definition: The flagship housing scheme targeting "Housing for All" for the urban poor by 2022 (extended), with four verticals: In-Situ Slum Redevelopment (ISSR), Affordable Housing in Partnership (AHP), Beneficiary-Led Construction (BLC), and Credit Linked Subsidy Scheme (CLSS).
• Origin: Launched June 2015; succeeded Rajiv Awas Yojana; PMAY-U 2.0 launched 2024 to continue coverage.
• UPSC: Four verticals and their target beneficiaries; EWS (income <₹3L), LIG (<₹6L), MIG-I (<₹12L), MIG-II (<₹18L); CLSS component routed through PLIs; role of ULBs.

Gentrification

• Definition: The process by which renovation and improvement of a deteriorated urban neighbourhood attracts wealthier residents, often displacing lower-income residents due to rising rents and property values.
• Origin: Term coined by sociologist Ruth Glass (1964) while studying London; relevant in Indian cities as heritage areas and slums are redeveloped.
• UPSC: Urban inequality angle; relevance to housing rights debates; contrast with slum clearance vs in-situ redevelopment debate; planning ethics dimension.