Declaration of intention to constitute a municipal area

(1) The State Government may, after making such inquiry as it may deem fit, and having regard to the population of any local area, density of population, the percentage of employment in non-agriculture activities in such area, the economic importance of such area, and such other factors as may be prescribed, by notification, declare its intention to specify such area to be a larger urban area, or a smaller urban area, or a transitional area: Provided that local area having acquired urban characteristics and importance such as availability of market facilities, established industries or potentialities to attract industries or commerce or education, health care or other such infrastructures for economic and industrial growth may also be considered. (2) The State Government shall, by notification, declare an area specified as -(a) a larger urban area to be a Municipal Corporation;(b) a smaller urban area to be a Municipal Council; and(c) a transitional area that is to say, an area in transition from a rural area to an urban area to be a Nagar Panchayat. (3) Notwithstanding anything contained in sub-section (1), the State Government may, by notification, determine separate conditions to constitute any hill area, pilgrim centre, tourist centre or mandi as a municipal area.