In the Census of India 2011, towns are categorized into different classes based on their population size. These classes help in organizing and understanding the urban population distribution across the country. Here's an elaboration of the classes of towns in the context of India's population:

1. Class I Town: Class I towns are the largest in terms of population. They are typically urban areas with a population of 100,000 or more.

2. Class II Town: Class II towns are somewhat smaller than Class I towns. They have a population ranging from 50,000 to 99,999.

3. Class III Town: Class III towns have a population size between 20,000 and 49,999. This category includes towns with a moderate population but below the thresholds of Class II and Class I.

4. Class IV Town: Class IV towns are the smallest in terms of population among urban areas. They consist of towns with a population size of less than 20,000.

So, when the Census of India 2011 identifies a town with a population size of 20,000-49,999, it falls into the category of a "Class III town." These categorizations help in planning, resource allocation, and understanding the distribution of urban population across the country.

THEREFORE THE CORRECT OPTION IS [2].