In this article, I track a housing scheme introduced in Hyderabad, India, to redevelop slums (in situ) into two-bedroom apartments. Drawing on ethnographic fieldwork, I argue that existing forms of governance cyclically enact a suspension of poor people's lives and often dispossess the poor of one set of rights in the process of delivering another set. In their own descriptions of these schemes, displaced communities emphatically account for the forms of suffering they repeatedly incur, which are unaccounted for in the records of the state. In their experience, governance is not only arbitrary and labyrinthine, but it also entails necessary experiences of dispossession that ironically accompany schemes for their development. This regime of dispossession that chronically underlies schemes for poverty alleviation is what I call ‘cruel governance’. Over time, this mode of development accompanied by dispossession has resulted in cynical realignments of subaltern politics towards the state and its projects.