Explained: Classification of Indian Cities into Tiers- Reason, categorization and other details

In the article below, try and understand the concept of classification of the Indian Cities into Tier 1, 2 and 3. Also know why the cities have been classified into various categories by the Government.
Tier 1,2,3 cities
Tier 1,2,3 cities

Cities in India have been classified into Tier 1, 2  and 3 categories. The most developed ones are called tier 1 and the underdeveloped ones are called tier 2 and tier 3 cities. The details of the categories have been provided in the article below. Take a look. 

Who divides cities into categories and how:

India has been divided into various categories by the Pay Commission. This is the current way of classification.

Before 2008, there were two categories in which the cities were classified in India. This was called the Historical classification and the cities were classified before the Sixth Pay Commission's recommendations. In this category the cities of Chennai, New Delhi, Kolkata and Mumbai were called A1 cities. The city statuses were later revised based on the results of the Census of India 2001. 

Hyderabad was then accorded the status of A1 city in 2007 and Bangalore also in the same year. CCA classification was however abolished in 2008.  

The classification was abolished as it was seen that the cities of C category were having A1 Pay commission which categorised them as A1 cities which had no amenities as such. Such anomalies paved the way for the current classification based on 7th Pay Commission. The earlier HRA of the cities was changed from A1 to X;A, B1 and B2 to Y and C and unclassified cities to Z. 

Now X, Y and Z are known as Tier 1, Tier 2 and Tier 3 cities respectively. There are eight X cities and 97 Y cities in India. 

X Cities: The salary the government is giving is divided into various categories. One of them is House Rent Allowance. In X category of cities the HRA is 24% of the basic pay. 

Y Cities: If the HRA of the people's serving in Government organization is 16% of their basic pay the city falls under Y category

Z Cities: In case the HRA is 8% of the basic pay the city is called as Z Category city. 

S. No. Tier 1 Cities
1 Bangalore
2 Chennai
3 Delhi
4 Hyderabad
5 Kolkata
6 Mumbai
7 Ahmedabad
8 Pune

Tier Classification:

Various classifications have been made in this category by various organizations. RBI classifies the cities under Tier 1-6 categories based on their population. 

As per the Reserve Bank of India, the following classification is followed:




Tier 1

1,00,000 and more

Tier 2

50,000 to 99,999

Tier 3

20,000 to 49,999

Tier 4

10,000 to 19,999

Tier 5

5000 to 9999

Tier 6

less than 5000

Other Classification: Rural, Urban category

Another major classification is done on the basis of urban or rural areas. 

Rural Centre: Less than 10, 000 population is the reason why the place is classified as rural centre

Semi Urban Centre: In this category, the population of the centre must be between 10,000 to 1 lakh

Urban Centre: 1 lakh to 10 lakh population areas is included the category of Urban Centre

Metropolitan Centre: This is the city where the population of people is above 1 million or 10 lakh. It should be a municipal corporation.  

Reason for Classification:

The classification is useful as it helps the Government can decide on the salary of its employees based on it. Various schemes that are brought out by the Government can be planned effectively due to this categorization.  Moreover taxation depends on the classification as well. So all in all the classification of the cities into various tiers is quite necessary. 

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