In a planned development process, the role of local government is important for both planning and implementation of development projects. Bangladesh has experienced more than 25 years of development planning and local government institutions have also been created during that period. Yet those institutions have contributed very little to the development process. In this article, development orientation, both in theory and in practice, of a rural local government is examined by using two criteria: degree of autonomy as reflected through the powers and functions to be performed and the sources of funds to execute those powers and functions; characteristics of leadership. Analysis has revealed that local government could not play a positive role because of the differences between ‘official’ and ‘operative’ objectives of the successive national governments and this difference has its roots in the existing power structure and class bases of the society.