It is possible to partly assess the quality of urban governance by a research on the Public Distribution System of subsidized foodstuff supply, though it is usually considered to be a tightly centralized institution exclusively managed by the line department. In the first section, the general issues regarding urban governance and the PDS are elaborated. The second section describes the general setting: the research was conducted in Hyderabad, an urban area of 6 million people, with a case study in the Old City. The organization chart of the PDS is then commented upon, by recalling the general goals of the programme and its local structure of management. An obstacle course limits access to subsidized foodstuffs and to ration cards, and the response of administration to the needs and demands of the consumers is far from being totally adequate. The third section illustrates how consumers behave regarding these access problems. Aspects of urban governance are brought into light, as the role of Corporators seems to be inferior to the ones played by Community based Organisations and informal intermediaries. An important issue is that these CBOs have a tendency to be caste or religion-based, which prevents adequate representation of the total local concerned people. Here, “civil society” or “community” are notions to be deconstructed. The fourth section brings general conclusions regarding the role of communities and neighbourhood in decentralisation. “Bonding” social capital is much more prevalent than “bridging” social capital. “Linking” social capital is highly spatially and socially segmented, which defines a “vertical” urban governance at the cost of urban solidarity and equity at the urban scale.