Declaration of intention to constitute a municipal area.

(1) The Governor may, after making such enquiry as he may deem fit and having regard to the population of any urban area, the density of population therein, the revenue generated for the administration of such area, the percentage of employment in agricultural activities in such area, the economic importance of such area, and such other factors as may be prescribed, by notification, declare his intention to specify such area to be a larger urban area, or a smaller urban area, or an area in transition from a rural area to an urban area referred to in this Act as a transitional area: Provided that no such declaration shall be made unless the population, - (a) in the case of a larger urban area, is seventy thousand or more, (b) in the case of a smaller urban area, is five thousand or more but is less than seventy thousand, and (c) in the case of a transitional area, is below five thousand: Provided further that the percentage of employment in agricultural activities in each such area shall be fifty per cent or more. Explanation. - "revenue generated" shall not include- (a) taxes, if any, distributed to the Municipality by the State Government in accordance with the principle of distribution of such taxes, referred to in article 243Y of the Constitution, (b) loans and grants from the State Government, and (c) loans and grants from the Central Government or any financial institution or other source. (2) The Governor shall, by notification, declare an area specified as - (i) a larger urban area to be a city, (ii) a smaller urban area to be a town, and (iii) a transitional area to be a Nagar Panchayat (by whatever name called). (3) Notwithstanding anything contained in sub-section (1), the Governor may, by notification, determine separate conditions to constitute any eco-sensitive area, tourist centre, pilgrim center, or bazar of any class as a municipal area.