Understanding Informal Settlements: Types and Challenges

Walk through almost any Indian city and you will see two worlds sitting side by side. Behind the glass towers and gated apartments lie dense clusters of tin roofs, narrow lanes, and homes built without a single approved plan. These are informal settlements, and they are not a marginal feature of urbanisation. According to the 2011 Census, around 65.5 million people lived in slums spread across 2,613 towns and cities. Understanding what these settlements are, the different forms they take, and the challenges they create is essential for anyone studying urban planning. This post breaks all of that down.

What are informal settlements? 🔗

Informal settlements are residential areas that develop outside the formal planning and legal framework of a city. People build homes on land they do not legally own, or on land they occupy without permission, and they do so without following building codes, zoning rules, or land-use regulations. The result is housing that exists in a grey zone: real and lived-in, but unrecognised by the systems meant to govern it.

The most widely used definition comes from UN-Habitat, which describes informal settlements as areas where residents lack security of tenure, where neighbourhoods usually lack basic services and infrastructure, and where housing does not comply with planning and building regulations. Three features stand out here: insecure tenure, poor services, and non-compliance with the law. A settlement does not need all three to qualify, but most informal settlements show some combination of them.

It helps to separate two terms that often get used interchangeably. A slum is a specific, often legally notified category, while an informal settlement is a broader, more descriptive label. As one academic resource notes, the word slum tends to be static and carries a negative judgement, while informal settlement is a more dynamic term that captures the real diversity of these places, from temporary shanties to notified slums to unauthorised colonies where housing is largely pucca.

Why do informal settlements emerge? 🔗

The core driver is the gap between how fast cities grow and how slowly affordable housing is built. People migrate from rural areas in search of work, but formal housing is either unavailable or unaffordable. So they settle wherever they can live close to jobs, even if that means occupying public land, railway margins, or land with unclear ownership. As one analysis points out, residents often work in the informal sector with low and irregular incomes, which pushes them toward areas where rent is low even if basic amenities are missing. Once a cluster takes root, it tends to expand on its own, without supervision, adding to the spatial pressures on the city.

The main types of informal settlements 🔗

Informal settlements are not all the same. Urban researchers and government agencies classify them into several distinct types, each with its own legal status, physical character, and set of problems. The classification used for Delhi is one of the most detailed in the country, and policy documents recognise several categories beyond planned colonies, including slum-designated areas, jhuggi-jhompri clusters, unauthorised colonies, regularised unauthorised colonies, resettlement colonies, and urban villages. Let us go through the most important ones.

Slums and notified slum areas 🔗

A slum, in the legal sense, is an area officially declared as such by the authorities. The Slum Areas (Improvement and Clearance) Act of 1956 allows authorities to notify an area as a slum where buildings are unfit for habitation because of dilapidation, overcrowding, faulty design, or the absence of light, ventilation, and sanitation. The Census uses a slightly different yardstick, defining a slum as a compact area of at least 300 people or about 60 to 70 households of poorly built, congested tenements in unhygienic surroundings, usually lacking proper sanitation and drinking water. This size cut-off matters, because it means many smaller clusters never get counted as slums at all.

Jhuggi-jhompri clusters 🔗

The jhuggi-jhompri cluster, often shortened to JJ cluster, is one of the most visible forms of informal housing in Indian cities. These are squatter settlements built on public or private land without the permission of the land-owning agency. They are typically made of kaccha materials such as plastic sheets, tin, and salvaged wood, and they spring up near construction sites, industrial areas, and other employment centres where labour is needed. In Delhi alone, jhuggi-jhompri clusters accommodate roughly 2.5 million people, while resettlement colonies were created to rehabilitate about a million slum dwellers. Over time, even these “temporary” clusters become settled communities whose residents hold ration cards and voter IDs, creating a tension between their illegal status and their everyday reality.

Resettlement colonies 🔗

Resettlement colonies are a different animal. They are planned relocations that come into being when the government evicts residents of slums or squatter settlements and moves them to new sites, usually on the urban periphery. A well-known example is JJ Colony in Madanpur Khadar, created in 2004 when slum dwellers evicted from across Delhi were relocated and given small leased plots. On paper these colonies offer some security of tenure and a grid layout. In practice they often sit far from jobs, lack adequate infrastructure, and leave residents stranded with long commutes and few livelihood options nearby. This is why some resettlement sites are abandoned, as people drift back to better-located parts of the city.

Unauthorised colonies 🔗

Unauthorised colonies are residential areas that grow on land without planning approval, but where the housing is often substantially pucca and the residents are not always the poorest of the poor. They violate planning norms yet function as ordinary neighbourhoods. Governments periodically try to bring them into the formal fold. In Delhi, the Pradhan Mantri Unauthorised Colonies in Delhi Awas Adhikar Yojana, or PM-UDAY, was launched to confer ownership rights to residents of such colonies. The scale is enormous: in 2026 the government announced the regularisation of 1,511 out of 1,731 unauthorised colonies on an “as is where is” basis, affecting around 45 lakh people. Once regularised, these colonies move into a new category of “regularised unauthorised colonies”.

Pavement dwellers 🔗

At the most extreme edge of housing insecurity are pavement dwellers, people who live on footpaths, road margins, and public spaces with no shelter to call their own. They have even less than jhuggi residents, who at least construct some form of housing. Pavement dwellers are exposed to weather, traffic, and constant risk of forced removal. In Delhi, estimates have long suggested that around seventy thousand people live on the pavements of the city. They represent absolute landlessness within the urban fabric.

Urban villages 🔗

Urban villages are former rural villages that got swallowed by the expanding city. As cities grew, agricultural land around these villages was acquired or built over, but the residential core, marked historically by the Lal Dora boundary, was left outside normal municipal building regulations. The Lal Dora was a red line drawn on revenue maps under the Delhi Land Revenue Act of 1908 to separate village residential land from farmland, allowing villagers to build without standard approvals. With farmland gone and populations rising, these village cores became cramped and chaotic. A government expert committee found that even basic civic services like water supply and sewage disposal could not be extended through the narrow, haphazard lanes of urbanised villages, leaving slum-like conditions despite the residents often owning their land.

How informal settlements affect urban development 🔗

The presence of large informal settlements shapes the entire trajectory of a city. The effects are social, economic, and physical, and they feed into one another.

Inadequate infrastructure and sanitation 🔗

The most pressing challenge is the absence of basic services. Because these settlements are illegal or unrecognised, they are frequently denied formal water and sanitation connections. The data is stark. The 2011 Census showed that 34 percent of slum households had no latrine within their premises and 43 percent had no source of drinking water. When sanitation is missing, open defecation and contaminated water follow, and disease spreads quickly through crowded lanes.

Overcrowding and health risks 🔗

Informal settlements pack large numbers of people into very small spaces. The official assessment is blunt: slums are marked by acute overcrowding and insanitary, dehumanising living conditions, often in environmentally fragile zones prone to floods and landslides. Shared toilets serving dozens of families, poor drainage, and inadequate waste disposal create a permanently unhygienic environment. The health consequences fall hardest on children, women, and the elderly.

Economic exclusion and the planning challenge 🔗

Informal settlements are not just a housing problem. Their residents power the urban economy as domestic workers, construction labourers, vendors, and rickshaw pullers, yet they remain excluded from formal credit, secure jobs, and many public benefits. For planners, this creates a genuine dilemma. The slum size cut-off used in official counts means smaller vulnerable clusters go unrecorded, so cities that report low slum numbers may be badly underestimating the real extent of urban deprivation. Eviction without proper resettlement only relocates the problem to the periphery, while ignoring these settlements entrenches inequality. The scale of the typology in a single city is itself a planning challenge, with researchers documenting how classifications include notified slums, unauthorised colonies, resettled colonies, urban villages, and squatter jhuggies, each needing a different response.

This is why understanding the typology matters so much. A pavement dweller, a jhuggi resident, an unauthorised colony homeowner, and an urban village landholder all live “informally”, but their needs, legal positions, and solutions are completely different. Good urban policy treats them as distinct rather than lumping them together under a single label.

What do you think? If you were advising a city government, would you prioritise upgrading existing informal settlements in place, or invest in new affordable housing to prevent them from forming? And do you think regularisation schemes solve the underlying problem, or simply postpone it?

References

1. https://www.opensciencepublications.com/fulltextarticles/ESS-2454-5953-3-124.pdf
2. https://unhabitat.org/sites/default/files/2025/08/definitions_-_informal_settlements_-annex_14.08.2025.pdf
3. https://ebooks.inflibnet.ac.in/socp07/chapter/informal-settlements/
4. https://www.downtoearth.org.in/urbanisation/informal-and-unplanned-urbanisation-welcome-to-the-new-urban-india-95919
5. https://link.springer.com/chapter/10.1007/978-81-322-2154-8_8
6. https://nbo.gov.in/pdf/SLUMS_IN_INDIA_Slum_Compendium_2015_English.pdf
7. https://arxiv.org/pdf/1909.05728
8. https://tos4thyear.wordpress.com/2016/12/03/informal-settlements-and-the-masterplan-by-dendup-tashi-namgyel-lalbiakzuala-ngente-tenzin-shera/
9. https://en.wikipedia.org/wiki/JJ_Colony_Madanpur_Khadar
10. https://www.99acres.com/articles/lal-dora-land-bgid.html
11. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2249686&reg=3&lang=1
12. https://mohua.gov.in/upload/uploadfiles/files/laldora.pdf
13. https://allianceforscience.org/blog/2023/05/hunger-poverty-and-disease-stalk-indias-slum-population-as-sustainable-development-goals-ignored/
14. https://www.allresearchjournal.com/archives/2023/vol9issue1/PartE/9-1-48-611.pdf
15. https://www.itpi.org.in/uploads/journalfiles/jul2_10.pdf