Inclusive growth is the new popular slogan animating development initiatives across the globe. Embracing the common rhetoric of rights discourses, the Indian government is investing heavily in novel welfare schemes for empowering poor people on the assumption that granting them access to the official market will put them on track for upward mobility and economic progress. In this article I use a case study of a massive slum relocation scheme in the Indian capital of Delhi to challenge this presumption. Resettlement is promoted as a way to accommodate the poor in the legal city. While it makes available desired commodities, its implementation is a complex process of renegotiating the divide between licit/illicit forms of urban habitation. Importantly, the bureaucratic procedures that create legal entitlements depend on the illicit, informal, and illegal domain that they aim to supplant. Thus, the new official suburbs emerge through the activity of people who flout the rules to meet the government target. Rather than a categorical shift from illegal to legal inhabitants of the city, resettlement re-creates urban citizenship as a form of tolerated encroachment.