The Census of 1931 revealed that the Walled City area was densely populated with as many as 90 persons per acre, while New Delhi had only about 10 persons per acre.

Several attempts were made to decongest the old city, for example, in 1888 an extension scheme called the Lahore Gate Improvement Scheme was planned by Robert Clarke for the Walled City residents. The idea was to draw residents away from the old city to a new type of market square, around which shops would be built. Streets in this redevelopment strictly followed the grid pattern and were of identical width, size and character. Land was divided into regular areas for the construction of neighbourhoods. But this development remained incomplete and did not help to decongest the old city.

In 1936, the Delhi Improvement Trust was set up. It built areas like Daiyaganj south for wealthy Indians. Houses were grouped around parks. Within the houses, space was divided according to new rules of privacy. Instead of spaces being shared by many families or groups, now different members of the same family had their own private spaces within the home.