India’s water sector is at a critical juncture, shaped by rising urbanisation, increasing demand, climate variability and growing stress on existing water resources. In this backdrop, policy interventions are central to building a resilient water infrastructure by addressing structural inefficiencies, expanding access and ensuring long-term sustainability across urban and rural systems.
Over the past decade, the government has adopted a programme-driven approach through initiatives such as the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Jal Jeevan Mission (JJM), Swachh Bharat Mission (SBM) and the National Mission for Clean Ganga (NMCG), which aim to strengthen infrastructure, improve service delivery, promote equitable access to safe drinking water and initiate river rejuvenation across the country. These interventions are increasingly moving beyond asset creation towards service reliability, operational efficiency and resource sustainability, reflecting a shift in policy priorities. By integrating infrastructure expansion with governance reforms, financing mechanisms and technological adoption, policy frameworks are enabling a more holistic and resilient approach to water management. As India progresses towards universal water access and improved sanitation, well-designed and effectively implemented policies will be critical to ensuring that investments deliver sustainable, efficient and citizen-centric water services.
Evolving policy impetus
India’s water policy landscape is increasingly characterised by a shift from infrastructure creation to service delivery, sustainability and efficiency, as reflected in the evolution of the government’s flagship programmes such as AMRUT, the JJM, SBM and NMCG. At the rural level, the extension and restructuring of the JJM into JJM 2.0 marks a critical policy evolution. With an outlay of Rs 8,690 billion and enhanced central assistance of Rs 3,590 billion, the programme moves beyond its initial infrastructure-centric phase towards long-term service delivery and institutional strengthening. As of March 20, 2026, about 86 per cent of the rural households have tap water connections under the JJM. Under SBM-Urban, 1,088 STPs and faecal sludge treatment plants each have been developed, with a sewage treatment capacity of about 40,820 million litres per day (mld) and over 54,000 kilolitres per day of faecal sludge treatment capacity. Additionally, 185,528 decentralised wastewater treatment systems and 43,675 waste stabilisation ponds have been created under SBM-Grameen, strengthening decentralised liquid waste management and sanitation systems. Further, consolidated river rejuvenation efforts under the NMCG have led to the completion of more than 64 per cent water-related projects, as of February 28, 2026.
Under AMRUT and AMRUT 2.0, the government has prioritised urban water infrastructure expansion alongside wastewater management, signalling a more integrated approach to urban water security. As of February 2026, about 23.8 million household tap water connections in total have been provided under AMRUT and AMRUT 2.0, indicating strong progress in last-mile connectivity. The scale of investments under AMRUT with 1,403 water supply projects worth Rs 433.6 billion and 889 sewerage and septage management projects worth Rs 344.67 billion, highlights a dual focus on augmenting water supply and strengthening sanitation systems. Besides, water and wastewater treatment capacity creation has been a key policy lever under AMRUT. While 6,140 mld of water treatment capacity has been approved, 5,330 mld has already been developed, alongside the laying or replacement of about 73,520 km of pipeline network. Similarly, 6,299 mld of sewage treatment capacity has been approved, with 4,843 mld developed, including 1,437 mld dedicated to recycle and reuse. This reflects a gradual policy transition towards circular water economy principles, particularly through reuse-oriented infrastructure.
On similar lines, AMRUT 2.0 builds on this momentum with a significantly expanded scale and sharper emphasis on future-ready infrastructure planning. The approval of 3,528 water supply projects worth Rs 1,196.36 billion (as of February 2026) is expected to create 11,393 mld of water treatment capacity and 126,000 km of network. In parallel, 583 sewerage projects worth Rs 661.18 billion aim to generate 6,650 mld of treatment capacity and 1,932 mld of recycle and reuse capacity. This reflects a clear policy intent to bridge infrastructure gaps, while embedding sustainability into system design.
Rising state-led policy push for wastewater reuse
States are adopting policy-led approaches to water supply, treatment and reuse, signalling a shift to integrated, regulation-driven systems focused on water management efficiency, conservation and circularity.
A key emerging trend is the institutionalisation of treated wastewater reuse. States have introduced dedicated policies to promote the safe reuse of treated water, particularly for non-potable applications. For instance, in March 2026, the West Bengal government has drafted the West Bengal State Policy on Safe Reuse of Treated Wastewater. The policy mandates treated wastewater use in new residential developments for flushing, landscaping and cleaning, and also promotes its adoption in commercial and public infrastructure. The inclusion of a GIS-based monitoring system to track water demand, wastewater generation and reuse signals a shift towards data-driven governance. Similarly, the Uttarakhand government’s Policy on Safe Reuse of Treated Water, 2026, approved in February 2026, establishes a uniform framework with defined targets, quality standards and financial rules. This will help enable a phased expansion of wastewater reuse practices across both urban and rural areas. Building on this, the Rajasthan government’s upcoming State Water Policy, announced in February 2026, adopts a broader approach by integrating drinking water, raw water and treated water management to address the rising urban and industrial demand, signalling a move towards holistic water resource planning.
Other states are focusing on strengthening regulatory mandates and improving water use efficiency. Gujarat’s Water Reuse Policy 2.0, proposed in January 2026, aims to mandate the use of treated wastewater for industries and real estate developers, supported by pricing mechanisms that make recycled water more attractive than freshwater sources. Furthermore, the Maharashtra government’s Sewage Treatment and Reuse Policy 2025, approved in January 2026, represents one of the most comprehensive efforts to operationalise a circular water economy. By mandating wastewater treatment and reuse across 424 urban local bodies and prioritising its use in sectors such as power generation, industry, urban applications and agriculture, the policy creates a structured demand for treated water. The establishment of multi-tiered monitoring mechanisms further strengthens accountability and implementation oversight.
Alongside, urban water governance is also being reinforced through demand-side management and resource regulation. Reflecting this trend, the Delhi government’s planned initiative to formulate a groundwater usage policy based on the findings of a borewell survey aims to quantify groundwater extraction. This reflects growing recognition of the need to curb unmonitored groundwater use to meet future water demand projections. Similarly, Haryana’s draft for a policy proposed in October 2026 focuses on reducing water leakages, curbing water wastage and ensuring reliable household supply, highlighting the importance of improving distribution efficiency besides augmenting supply. Overall, these state-level initiatives demonstrate a clear policy shift towards reuse-driven, efficiency-oriented and technology-enabled water management.
Blended public financing and market-led capital mobilisation
The evolving financing landscape in India’s water sector reflects a clear shift towards a blended model that combines sustained public investment with efforts to catalyse market-led capital. In line with this, under the Union Budget 2026-27, the Ministry of Housing and Urban Affairs has been allocated Rs 855.22 billion, marking a 49.5 per cent increase over the revised estimate for 2025-26. Within this, targeted allocations such as Rs 25 billion for SBM-Urban and Rs 80 billion for AMRUT indicate the continued prioritisation of urban water supply, sewerage and sanitation infrastructure. These schemes remain central to improving urban service levels, while also laying the groundwork for more efficient and sustainable water management systems. A sharper expansion is visible in the water sector under the Ministry of Jal Shakti, which has received Rs 948.08 billion, marking an increase of 128.8 per cent over the previous year’s revised estimate. Similarly, a substantial share of Rs 676.7 billion has been allocated to the JJM, while Rs 71.92 billion has been earmarked for SBM-Grameen. This highlights the government’s continued focus on achieving universal rural tap water coverage, while strengthening efficient wastewater management. Meanwhile, allocations such as Rs 31 billion for the NMCG underline sustained investments in river rejuvenation and basin-level management.
Complementing these budgetary allocations, the approval of the Urban Challenge Fund (UCF) in February 2026 signals a structural shift in financing strategy. With a central assistance outlay of Rs 1,000 billion covering 25 per cent of the project costs, conditional on raising at least 50 per cent through market mechanisms, the fund is designed to catalyse private participation and market-linked financing. By leveraging public funds to mobilise additional capital, the UCF is expected to unlock total investments of around Rs 4,000 billion by FY 2030-31. These measures reflect a dual financing approach, highlighting sustained public investment alongside innovative mechanisms to boost capital mobilisation and project viability.
Charting future pathways
Building a resilient water sector in India requires a shift from reactive measures to an integrated, preventive and adaptive policy framework that combines infrastructure expansion with stronger regulation, technology adoption and community participation. A key priority is strengthening water quality management and river rejuvenation. While the number of polluted rivers stretches has declined from 351 in 2018 to 296 in 2025, the continued presence of a large number of polluted waterbodies indicates gaps in enforcement and treatment capacity. Recent localised contamination, especially in industrial clusters, demonstrates the need for stricter oversight and real-time effluent monitoring. This calls for scaling digital surveillance, enforcing zero-liquid discharge in high-risk zones and stronger coordination between pollution control boards and local authorities.
Infrastructure development must also move towards a more circular and resource-efficient model. Expanding sewage treatment capacity alone will not be sufficient unless it is complemented by large-scale reuse of treated wastewater. Government interventions should prioritise assured demand for recycled water across industry, agriculture and urban utilities, backed by appropriate pricing and incentives. Moreover, climate resilience must be embedded in water infrastructure planning. Rising rainfall variability and urban water stress call for investments in decentralised systems such as rainwater harvesting, aquifer recharge and local storage. Integrated planning that connects water management with energy efficiency, waste management and urban development will be key to building a resilient and future-ready water sector in India.
Aditi Gupta
