On what basis are pincodes distributed?

A Postal Index Number or PIN or Pincode is the post office numbering or postal code system used by India Post. It’s six digits long, and was introduced on August 15, 1972. There are nine PIN zones in India. The first digit of the PIN code indicates the region in which a given post office falls, the second digit the sub-region, the third the sorting district. The final three digits are assigned to individual post offices.