The water sector is at a critical juncture, witnessing large investments, policy reforms and infrastructure upgrades aimed at strengthening water security and long-term sustainability. However, urban distribution systems continue to face significant challenges, including leakages, faulty metering and billing inefficiencies. Urban local bodies (ULBs) operate under constrained finances and limited technical capacity while coping with rising demand from rapid urbanisation. High levels of non-revenue water (NRW), caused by ageing pipelines, illegal connections and defective meters, diminish revenue returns and undermine service reliability. Combined with weak cost recovery and tariffs, these issues lead to poor service quality, intermittent supply and increased reliance on tankers and groundwater.
Globally, average NRW levels hover around 30 per cent. In India, however, they are in the 35-70 per cent range, placing many cities well above global benchmarks. This gap highlights both the urgency of intervention and the scale of opportunity. Reducing NRW is essential for financial sustainability, stronger metering and billing, and viable public-private partnerships (PPPs).
Financial impact of high NRW on ULBs
High NRW levels severely strain the financial position of ULBs in India, as a substantial share of supplied water generates no revenue due to leaks, theft and billing gaps. While full production and distribution costs are incurred, weak cost recovery results in persistent cash deficits and increased reliance on state subsidies. High NRW raises the cost per unit sold, weakens project bankability and limits access to finance. It also diverts capital towards new supply projects instead of fixing systemic losses, thereby deepening long-term fiscal stress.
These financial weaknesses are reflected in broader assessments of municipal governance and fiscal health. Performance audits conducted by the Comptroller and Auditor General across various ULBs in multiple states indicate that own-source revenues form only a limited share of total municipal income. This structural reliance on intergovernmental transfers has left many ULBs fiscally vulnerable and constrained in their decision-making autonomy.
Urgent need to improve 24×7 water supply
The shift to 24×7 water supply is seen as a key reform to reduce NRW and consequently strengthen ULB finances. Steady pressure lowers stress on infrastructure and enables efficient water supply monitoring, thereby improving leak control and billing accuracy. Indian cities have begun piloting and scaling such models to test their effectiveness. For instance, in December 2025, the Coimbatore City Municipal Corporation reported tangible gains under its continuous water supply initiative, with water losses declining from about 23 per cent to 16 per cent, indicating improved control over leakages and distribution efficiency. Meanwhile, the per capita consumption has reduced from 135 litres per capita per day to 110 litres, reflecting better demand management and reduced wastage. Notably, with this initiative, improvement in operational efficiency has translated into financial gains, with water supply revenues rising from Rs 320 million to Rs 440 million.
Similarly, as of December 2025, the Municipal Corporation of Chandigarh has explored international partnerships for the effective implementation of its 24×7 water supply scheme. Earlier, in June 2025, the Tiruchirappalli City Municipal Corporation completed valve installations under its 24×7 water supply pilot project to ensure uniform pressure for 14,819 connections, enabling better leak detection and reduced physical losses.
Alongside these developments, implementation challenges highlight that 24×7 supply is not automatically synonymous with lower losses. In Ludhiana, for instance, leakages in the canal-based 24×7 water supply project highlighted the risks of scaling up without fully stabilising the underlying network. Similarly, faults flagged in the Manimajra 24×7 project in Chandigarh point to gaps in execution and quality control. These cases demonstrate that without rehabilitating ageing pipelines and carefully managing pressure, continuous supply may expose structural weaknesses instead of resolving them.
Private sector involvement and supervisory changes
ULBs are increasingly leveraging private sector participation to reduce NRW and enhance operational efficiency. Through outsourcing, consultancy support and performance-based contracts, they bridge capacity gaps while retaining regulatory oversight.
For instance, in September 2025, the Delhi Jal Board (DJB) moved towards limited outsourcing by increasing the number of private licence holders authorised to provide new water connections to 1,000. This marked a shift from the board’s earlier monopoly over metered connections. By expanding the pool of licensed providers, the utility aims to streamline connection processes, reduce delays and discourage illegal tapping. To further streamline water supply, the Delhi government is also planning to divide the city into eight zones under a “one zone, one operator model”. Each operator will manage DJB infrastructure in its zone, with oversight by DJB. Such zonal approaches, often backed by private technical expertise, enable tighter monitoring and accountability.
Similarly, as of August 2025, the Nagpur Municipal Corporation has sought consultancy support for a three-year period to overhaul monitoring of its 24×7 water supply system. By bringing in external technical expertise, the corporation aims to strengthen oversight, improve system diagnostics and enhance performance tracking.
Cost-reflective water tariffs and pricing revisions
In 2025-26, ULBs have actively implemented tariff rationalisation, billing reforms and settlement schemes, marking a clear shift towards financially sustainable water utilities focused on revenue-backed infrastructure, metering and leakage control.
In line with this, the Hubballi-Dharwad Municipal Corporation (HDMC) is considering a one-time settlement scheme to clear pending water dues amounting to Rs 3.24 billion as of February 2026, of which Rs 1.24 billion represents accrued interest. Under the proposed scheme, interest would be waived and only the principal amount would be collected. By regularising payments and unlocking stalled revenues, the initiative aims to restore HDMC’s cash flows, enabling funds to be redirected to network rehabilitation and NRW reduction.
Building on this, in December 2025, the Bangalore Water Supply and Sewerage Board extended its Sarala Cauvery equated monthly instalment scheme to commercial establishments, in addition to residential properties. Applicants are permitted to pay 80 per cent of the connection cost in 12 monthly instalments after a 20 per cent down payment. Simultaneously, in December 2025, the Municipal Corporation of Jalandhar launched Android-based point-of-sale machines for on-the-spot water and sewerage bill collection, replacing older GPRS-based systems. This digital upgrade enhances billing accuracy, accelerates collections and ensures real-time data, cutting commercial losses that drive urban NRW.
In October 2025, the Nashik Municipal Corporation introduced a spot water tax billing system, issuing bills worth Rs 1.85 billion to 150,000 consumers out of its total 215,000 connections. This initiative was introduced in response to a significant gap between the annual water supply expenditure of Rs 1.1 billion and revenue realisation of Rs 470 million. Handheld billing and mandatory meters are expected to tackle under-reporting, strengthen real-time billing, curb commercial NRW and improve revenue assurance. In October 2025, the Tiruchirappalli City Municipal Corporation restructured tariffs, revising domestic water charges from a flat Rs 180 per month to Rs 180-Rs 360 for up to 16 kilolitres, with hikes ranging from 11 per cent to 100 per cent based on property size. Earlier, in September 2025, the Maharashtra Industrial Development Corporation revised industrial water charges by Rs 2.75 per cubic metre, marking its first major revision since 2013. The increase reflected rising electricity and operational costs. In key industrial areas such as the Kharadi Knowledge Park, charges were set at Rs 104.75 per cubic metre, inclusive of procurement costs from the Pune Municipal Corporation. Cost-reflective industrial tariffs help prevent revenue loss and enable utilities to reinvest in infrastructure maintenance, monitoring systems and leak detection technologies, thereby indirectly supporting NRW reduction.
Advancing water metering
Metering is critical to reducing NRW and strengthening the finances of ULBs. Accurate measurement helps distinguish between physical and commercial losses, improves revenue projections, enables effective water audits and supports targeted interventions.
Recognising this, several cities have been strengthening their metering infrastructure. One such example is the installation of smart electromagnetic bulk meters by the Chennai Metropolitan Water Supply and Sewerage Board in December 2025 to curb water losses. These meters facilitate real-time flow monitoring, faster anomaly detection and improved operational control, thereby directly reducing NRW. Meanwhile, the Surat Municipal Corporation is planning to install free water meters across all old and new properties in the city. The initiative supports Surat’s broader objective of implementing a 24×7 water supply system. At present, water bills have been issued to around 57 per cent of the properties. With revised billing provisions, an additional 15,000 properties with larger pipelines are being brought into the billing net. Expanding metering coverage improves consumption tracking, billing accuracy and revenue realisation by aligning supply and billing data. Accurate baseline data also enhances project bankability, supports performance-based PPP contracts and improves transparency and cost recovery.
Future ahead
Addressing high NRW requires ULBs to shift from supply expansion to efficiency-led financial reform. While consumer-facing incentives such as Goa’s waiver of Rs 655 million under its zero-water bill scheme promote conservation, they must be balanced against system losses and long-term cost recovery. Without reducing technical and commercial losses, revenue forgone through subsidies further strains municipal finances.
The next phase should prioritise universal metering, district metered areas (DMAs) and SCADA-enabled monitoring under government programmes such as AMRUT 2.0. With 408 projects and 1,153 DMAs already approved as of February 2026, cities have a template for ring-fencing supply zones, improving leak detection and strengthening billing accuracy. Besides, a coordinated approach is essential for on-ground outcomes.
Network rehabilitation must go hand in hand with digital reforms. Ageing pipelines, poor pressure management and inadequate asset maintenance diminish returns and increase operating costs. Recognising this, the Technology Development Board, under the Ministry of Science and Technology, is supporting a project by Kapih Deep Tech Private Limited, a deep technology company involved in developing artificial intelligence (AI)-based digital twins. The company is developing an AI-driven adaptive digital twin framework for urban water distribution to help cities reduce NRW, optimise ageing infrastructure, and enhance operational efficiency and service resilience. Ultimately, NRW reduction should be treated not merely as a technical intervention but as a financial restructuring strategy, which strengthens user charge frameworks, improves cost recovery and enables sustainable infrastructure investment.
Aditi Gupta
