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Synopsis Swarana Jayanti Sahari Rojgar Yojana (SJSRY) is a major urban poverty alleviation scheme in vogue in India. It marks a bold initiative towards democratic decentralisation as it relies heavily on the community based organisations of urban poor women, instead of traditional top down systems for extension of benefits envisaged. Responsiveness, transparency, accountability, participatory solutions and consensual decisions are some of the hallmarks of good governance and these in turn entail democratic decentralisation. Present study on the actual working of SJSRY in the states of Andhra Pradesh and West Bengal points to reforms issues that are to be addressed to make the administrative systems more effective. Since the scheme is sponsored and largely financed by the Central Government, the centralisation pulls are still strong. A right balance between the centripetal and centrifugal forces in decision making need to be worked out. Another issue is to dovetail the scheme's administration at the cutting edge level in the overall municipal institutional structure, as envisaged under the 74 Constitutional Amendment.