This paper analyzes the process of ‘Pahari (the hill people)-Bengali' dichotomy related with the development programs undertaken by government and donor agencies in Bangladesh. There are twelveethnic communities living in the Chittagong Hill Tracts, namely, Chakma, Marma, Pankho, Khumi,Lusai, Murang, Bonojogi, Tanchanga, Bom, Kheang, Chak and Tripura. But the Bengali people treatthem as ‘Pahari' collectively. Therefore, the paper focuses on the interaction between the state policyand the ethnic minority constructing ‘Pahari-Bengali' discourse in Bangladesh through the develop-ment programs taken by state and donor agencies covering historical as well as current trends. Theauthors explain how the state policy of the dominant class emphases and legalizes their power on theethnic minority in the name of ‘development' and the way of use of these development programs towipeout the cultural identity of ‘pahari' people. Although this article seeks to interpret the ‘developmentdiscourse' of Chittagong Hill Tracts (CHT), it is not simply an exploration of the practice of subsequentruling parties in Bangladesh. This article is about the ‘local' effects/ national power relations involving‘Bengali' people and ‘pahari' people, about how those relations of power have normalized, to useFoucault's word, certain practices, conditioned the nature of resistance/struggle to state repression.