This paper attempts to assess the changes in workforce structure and the system of governance associated with macroeconomic reforms and their impact on the rate and pattern of urbanisation in India. The analysis of development dynamics in the 1990s shows that there has been an all-round decline in the growth of employment. Income growth and incidence of poverty have been extremely uneven across states. Thus a slowing down in the rate of urbanisation and concentrations of demographic growth in developed states seem to be the logical outcome. The process of urbanisation has also become exclusionary in nature, as only a few large cities with a strong economic base are able to raise resources for development, leaving out small and medium towns.