Metropolitan regions in India act as growth engines and propel conurbation processes. Within metropolitan regions, there are strong ‘spatial juxtapositions’ (that is, spatial and economic development processes moved to urban peripheries to create agglomeration economies, competing with the existing city). Using the concepts of ‘second capability’, that is, ‘the formation of a state bureaucracy for extracting revenue’ defined by Sassen (2006, p. 72) in a modified way of rent seeking (that are outside the ‘standardized taxation’ and includes politicians and not just state bureaucracy as outlined by Sassen), and ‘regulatory fractures’—defined by Sassen as ‘in-between spaces that do not comply with regulation and yet not in violation’ (Sassen, 2006, p. 392)—the present article explains how spatial, legal, administrative, political, social and economic inequalities occur in the development process. The article shows that non-compliance to the 74th Constitutional Amendment Act (74th CAA) in setting up Metropolitan Planning and District Planning Committees to manage the affairs of the periphery of the metropolitan cities have resulted in spatial inequalities in Indian cities. It reveals how the political economy equations within a state dictate the type of urban expansion that causes inequalities as evidenced through various case studies. This article analyzes such uneven spatial expansions and their consequences in terms of spatial, economic and social inequality, taking case studies of Hubli–Dharwad, Surat and Indore. It uses historical Google images and Survey of India maps along with land use surveys to study planned and unplanned development processes, relating this to state bureaucracy and regulatory fractures. It shows how a metropolitan government, if in place as per the 74th CAA, can reduce the spatial inequalities in metropolitan development.