The paper attempts a stock taking of urbanization in the post colonial period in India and critically examines the scenarios projected by international and national agencies. The policies and programmes of the government have been reviewed while analyzing the variations in demographic growth across size categories of urban centres and states, changing employment and unemployment situation, restructuring of local governance and of financial institutions. It proposes a paradigm shift in spatial development strategy of supporting a large number of potentially successful small and medium-sized towns and at the same time launching more inclusive programmes in large cities, ensuring that they absorb a part of the rural–urban transfer.