The simplest and the most commonly used index for measuring the degree of urbanisation is the percentage of population living in urban areas. This is calculated as follows:

The advantage of this index of the degree of urbanisation is that it is easy to calculate and interpret. The data needed for calculating this index is also easily available.

For tracing historical trends or for international comparisons, however, this index has limited use, as it suffers from several weaknesses. The definition of what constitutes an urban area differs from country to country.

Even in the same country, it may differ from time to time. Moreover, this index does not give us any indication of the percentage of the population living in different types of towns, categorised according to population size.

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It has been suggested by Eduardo Arraign that, for comparative purposes, it is more meaningful to compare the percentages of the people living in urban areas of different sizes than by comparing the percentages of people living in urban areas as defined in censuses.

For instance, since the 1961 census of India, all towns and agglomerations have been grouped into six classes, according to population size: (1) Class I, Population of 100,000 and above; (2) Class II, Population of 50,000 to 99,999; (3) Class III, Population of 20,000 to 49,999; (4) Class IV, Population of 10,000 to 19,999; (5) Class V, Population of 5,000 to 9,999; and (6) Class VI, Population of less than 5,000.

It is, therefore, useful to calculate the percentages of the Indian population living in different classes of towns in a particular census year and then compare these percentages with the corresponding percentages in an earlier or later census year.

It may be observed that the percentage of the Indian population living in urban areas increased from 19.91 in 1971 to 23.34 in 1981, an increase of 17.72 per cent and 25.7 in 1991 an increase of 10.20 per cent during 1981-91.

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It may, however, be noted that between 1971 and 1981 the total urban population increased by 46.23 per cent and between 1981 and 1991 by 36.09 per cent.

The population in towns of 20,000 and above increased by 50.07 per cent during 1971-81 and by 40.78 per cent during 1981-91. Similar comparisons may be made for each class of town.

Table 11.5 illustrates that the picture of urbanisation in various countries is distorted if the national definition of “urban” is accepted for international comparisons.

According to the data for 1950, Israel acquired the first rank for the degree of urbanisation it had achieved; 79.8 per cent of its population lived in urban areas.

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When the population living in cities with 100,000 populations and more was considered, the United Kingdom gained the first rank for the degree of urbanisation; 71.7 per cent of its population lived in such cities. Israel was pushed down to the seventh rank, with only 30.00 per cent of its population living in such cities.