As part of the study, IIHS examined interpretations and practices of rural–urban classification across Indian states, analysed criteria used by previous Finance Commissions for devolving grants to local bodies, and assessed municipal finance systems, urban transition dynamics, and existing incentives and disincentives shaping urbanisation. Field visits in Maharashtra, Bihar, and Himachal Pradesh mapped settlement-level patterns of urban transition. Drawing on field insights, secondary research, and comparative learning from IIHS’s work across states, the study developed recommendations to better support transitioning areas, including targeted infrastructure and capacity-development packages and revised grant devolution aligned with projected urban population growth.