India’s water sector is at a critical juncture, influenced by rising urbanisation, increasing demand, climate variability and growing stress on existing water resources. In this scenario, 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), with the aim of strengthening basic infrastructure to 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 water 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, 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 May 11, 2026, about 82 per cent of the rural households have tap water connections under the JJM. Further, in May 2026, the governments of Maharashtra, Uttar Pradesh, Rajasthan, Andhra Pradesh, Meghalaya, Uttarakhand, Karnataka, Tripura, Mizoram, Ladakh, etc. have signed MoUs with the central government under JJM 2.0. The MoUs mandate a gram panchayat-led, service-based model of water governance, with a focus on community participation and structural reforms to improve operations and maintenance of rural water supply systems.
Under SBM-Urban, 1,088 sewage treatment plants (STPs) and faecal sludge treatment plants have been developed as of March 2026, 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, around 186,900 decentralised wastewater treatment systems and 43,016 waste stabilisation ponds have been created under SBM-Grameen as of May 2026; strengthening decentralised liquid waste management and sanitation systems. Further, consolidated river rejuvenation efforts under the NMCG have led to the completion of more than 69 per cent water-related projects, as of April 30, 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 April 2026, about 24.6 million household tap water connections and 18.2 million sewer connections in total have been provided under AMRUT and AMRUT 2.0, indicating strong progress in last-mile connectivity. Further, substantial progress has been made in strengthening the urban water infrastructure, with more than 93,450 km of water pipelines and over 26,990 km of sewer pipelines laid or replaced. This has been accompanied by the creation of 5,429 mld of water treatment capacity and 5,178 mld of sewage treatment capacity, significantly improving service delivery and wastewater management capabilities.
The scale of investments under AMRUT with 1,403 water supply projects worth over Rs 430 billion and 889 sewerage and septage management projects worth around Rs 345 billion, highlights a dual focus on augmenting water supply and strengthening sanitation systems. Besides, 838 drainage projects worth around Rs 30 billion have also been completed.
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 April 2026, the Odisha government has released the Policy on Reuse of Treated Used Water of Urban Odisha, 2026 in April 2026. The policy targets 100 per cent collection, conveyance and treatment of used water by 2030, with wastewater reuse reaching 20 per cent by 2030 and 50 per cent by 2036. In cities with functional sewerage systems and STPs, 20 per cent of treated water reuse is to be achieved within six months. It also introduces a tariff model under which treated wastewater will be priced lower than potable water, supported by incentives and a multi-tier governance framework for implementation and monitoring. Meanwhile, the Uttar Pradesh cabinet has approved the Safe Reuse of Treated Water Policy, 2026 in April 2026. The policy targets reuse of 50 per cent of the wastewater by 2030 and 100 per cent by 2035, in response to rising pressure on freshwater resources.
Earlier, in March 2026, the West Bengal government 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.
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 the financing strategy. With a central assistance outlay of Rs 1,000 billion covering 25 per cent of 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 river stretches has declined from 351 in 2018 to 296 in 2025, the continued presence of a large number of polluted waterbodies indicates some gaps in enforcement and treatment capacity. Recent localised contamination, especially in industrial clusters, demonstrates the need for stricter oversight and real-time effluent monitoring.
Infrastructure development must also move towards a more circular and resource-efficient model. Merely expanding sewage treatment capacity 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.
Aditi Gupta
