Urban land development in India is changing under the auspices of economic liberalisation. Kolkata has been in the forefront of this transformation through development of new townships in the urban peripheries based on a distinctive state-led land development model. Within this context, New Town, Kolkata (also known as Rajarhat) provides a highly illuminative case to articulate the ways in which, the state is implementing its neo-liberal agenda in land development. It rides on political and ideological high ground by seeking to create a 'model development' of state-market partnership for a dual goal of fostering capitalist interest while fulfilling welfarist principles. Interesting insights have emerged that point to a policy paradox. On one hand, the process follows market principles of efficacy and efficiency; on the other, state's keenness in extending control persists, thereby creating a highly uneven terrain for the state-market interaction. New Town reflects a typical quasi-market condition shaped by the monopolistic state, poorly-structured role of private sector, absence of civic bodies and minimal land and housing provision for the poor. In India, as internationally, with the economic liberalisation market ideology is increasingly construed as good governance. In this context, New Town is a step in the right direction but the progress is patchy, uneven and still evolving.