By Arushi Bhargava |8 December 2025
At 4 AM every day in Gandhinagar, a water-stressed city in Gujarat, Rajesh Kumar wakes up—not by choice, but by necessity. There is only a one-hour window when the municipal water supply comes on, and that single hour is crucial for his family to secure water for the whole day. He fills every container in his small home, buckets, drums, and bottles, before the tap runs dry again. By 5:30 AM, his children are awake from the noise, and his wife has already started the day’s cooking early to use the water while it lasts.
This amount is just enough for his family. When guests visit or when someone falls sick, Rajesh must buy water from private tankers at five times the municipal rate.
Rajesh’s story is not unique. It is a daily reality for millions of households across India, serving as a reminder that the country’s water scarcity is not only about physical scarcity, but about a critical financial constraint in how water systems are managed and sustained.
A challenge of financial sustainability, not just physical scarcity
According to a NITI Aayog report, Gandhinagar is projected to face a severe water crisis by 2030, with municipal water supply currently restricted to just one to two hours a day1.
The crisis extends across India. In Central India, Indore illustrates how Indian cities are struggling to secure water for their residents. This city of 3.3 million people battles with falling groundwater levels, the water table has dropped by over eight meters in the past decade, while losing two-thirds2 of its water through leaking old pipes installed decades ago during the city’s rapid expansion.
The picture is even bleaker elsewhere. Ranchi has India’s highest water loss at 70%3 from aging infrastructure and hard rock terrain that cannot retain groundwater. Likewise, Shimla, India’s popular hill station whose economy relies heavily on tourism, now supplies water on alternate days as sources dry up, with outer areas getting water only once every 3-4 days.
These examples are of course cases of increasing demand and declining supply of water from natural sources. But they also reveal something deeper: a gap in the existing financing models , with questions arising of who pays for the systems to ensure a sustainable and equitable flow of water to residents. Like in many other countries, the focus has historically been heavily weighted toward capital expenditure (CapEx) for building new infrastructure, often at the expense of developing self-sustaining operational models (OpEx) required for long-term maintenance. The result is a predictable cycle of failure. Infrastructure decays. Service collapses. Communities suffer.
The cycle of revenue and inequality
Breaking this cycle requires confronting two challenges simultaneously, generating sustainable revenue while ensuring equitable access. These aren’t competing goals, they’re interdependent.
On the revenue side, the math is brutal. Low water tariffs fall short in generating adequate revenue for operations and maintenance. As systems decay, service quality deteriorates. When service is poor, citizens understandably refuse to pay more. This traps municipalities in a reinforcing loop: mounting deficits, decaying infrastructure, worsening service, and eroding public trust.
On the equity side, the burden of these constraints falls unevenly. Wealthier households can afford private borewells and tanker water. Poor families cannot. They end up paying the highest prices for the declining services, often buying water by the bucket from vendors when municipal supply falls short.
These dynamics reinforce each other. Poor service drives inequality. Inequality undermines revenue. Without revenue, service cannot improve. The cycle continues.
Any financing model that ignores this reality isn’t just unjust, it’s unsustainable. People won’t support systems that don’t serve them fairly. While national policies have aimed to address these challenges, converting policy ambition into operational outcomes that create lasting change has been elusive. A key gap lies in the absence of locally led financial innovation that addresses both revenue sustainability and equitable access as inseparable parts of the same solution.
Money alone is not the answer
India is expected to invest nearly USD 270 billion4 in water infrastructure over the next decade. Yet capital alone cannot fix a system where incentives are misaligned and public trust is fragile. The experience of cities such as Chennai, which received substantial capital funding (INR 3,500 crores) for new water supply schemes in 20195, demonstrates that capital investment alone is insufficient when the underlying financial model for operations and maintenance is structurally weak. This highlights the need for a paradigm shift where infrastructure expansion must be accompanied by robust operational and maintenance financing to deliver lasting resilience.
What India needs are financial models that reward efficiency, ensure predictable revenue, protect vulnerable users, and rebuild confidence in public utilities. This requires looking beyond traditional government funding to understand how other countries have mobilised capital while maintaining equity—then adapting those lessons to local contexts.
The path forward involves learning from approaches that have worked elsewhere, then empowering local municipalities to design solutions suited to their own realities.
Turning to Australia for inspiration
Australia’s response to the Millennium Drought offers relevant insights. Between 1997 and 2009, southeastern Australia experienced its most severe drought in over a century. Rainfall declined sharply, rivers slowed to a trickle, and Melbourne’s water storage fell to just 25.6 percent6, placing the city dangerously close to supply failure.
Rather than simply imposing higher rates, water authorities in cities like Melbourne and Sydney made the financial reality visible to residents. Monthly bills displayed real-time reservoir levels7. Town hall meetings presented infrastructure needs with detailed cost breakdowns. Authorities offered free home water audits that identified an average of 5-7 inefficient fixtures per household, then subsidised replacements. This combination of transparency and practical support proved transformative. Melbourne cut its per capita water demand by nearly 50%8. Sydney not only met its water reduction target five years ahead of schedule but has sustained it, even while adding a million new residents.
This experience isn’t about providing a rigid blueprint for India, but about sharing a proven principle: when financial models are transparent, engaging the wider public and considering the longer term sustainability of the water systems, can create change and concrete improvements become achievable.
Creating home-grown financial models
External lessons offer insights, but cannot replace local solutions. True progress emerges from collaboration among Indian water professionals, researchers, and municipal managers—those with both technical expertise and practical understanding of local realities. They are best positioned to navigate local complexity and design solutions that are both theoretically sound and practically achievable.
These professionals need focused support to translate this expertise into action: designing tariff structures , such as tiered pricing or lifeline rates— that citizens will trust, building business cases for smart metering that demonstrate returns within 3-5 years, structuring blended finance that mobilises investment, and crafting contracts that reward efficiency.Critically, equity must be built into the foundation of these financing models, not treated as an afterthought. Cross-subsidies, lifeline tariffs for basic needs, and targeted assistance programs ensure no household is denied water due to inability to pay. This isn’t just morally necessary—it’s financially essential. When low-income families are forced to buy water from tankers at five times the official rate, they’ve already proven their willingness to pay for reliable service. The challenge lies in the system’s limited ability to capture that revenue while providing better and more affordable service.
Encouragingly, several Indian cities are already proving that this approach works. Malkapur achieved 24/7 water supply through a public-private partnership where operator payments depend on service hours delivered9. Jamshedpur slashed its non-revenue water from 36% to 10% by structuring a concession that only generates profits after achieving efficiency targets10. These achievements were born from local initiatives that adapted global best practices to fit the Indian context.
This approach mirrors India’s remarkable success in scaling its renewable energy sector—driven by smart policy, blended finance, and affordable capital. The same principles of clear frameworks, risk-sharing, and patient capital can be applied to secure India’s water future.
Conclusion: Call to Action
India’s water crisis points to the need for a shift in approach toward more sustainable financial and operational models, going beyond the focus on infrastructure investment alone. The country has demonstrated good practice through initiatives like Malkapur’s 24/7 supply and Jamshedpur’s efficiency gains, yet these remain isolated successes. Lessons from other contexts such as Australia’s response to the Millennium Drought would be invaluable in scaling solutions. However, no blueprint exists—effective approaches need co-production and co-learning in different contexts, tailored to local realities.
Financing models must not simply privatise all costs but include social equity as a key foundation for sustainability and justice. Cross-subsidies, lifeline tariffs, and targeted assistance ensure that no family is denied water due to inability to pay. This isn’t just morally necessary—it’s financially essential for building the public trust that any sustainable system requires.
The taps can run reliably in every home. Water can be clean, affordable, and accessible for everyone. Achieving this vision requires recognising that financial sustainability and social equity are not trade-offs, but mutually reinforcing goals. When communities are engaged, when financing models are sound, and when equity is built into the foundation, transformation becomes possible.
References
- NITI Aayog. (2019). Composite Water Management Index: A Tool for Water Management. New Delhi: NITI Aayog, Ministry of Jal Shakti, and Ministry of Rural Development, Government of India.
- Indore Municipal Corporation. (2018). Water Supply Assessment and Infrastructure Report. Indore: Urban Development Department, Government of Madhya Pradesh. The report documents non-revenue water losses of approximately 66% due to leakage in the city’s aging distribution network.
- Ranchi Municipal Corporation. (2017). Credit Rating Assessment Report. Ranchi: Urban Development & Housing Department, Government of Jharkhand. The report highlights non-revenue water losses of approximately 70% in Ranchi’s water supply system.
- Bank of America Merrill Lynch. (2019). India to invest US$270 billion in water infrastructure over the next 10–15 years. Government of India – India Investment Grid summary.
- Government of Tamil Nadu; Ministry of Jal Shakti; Comptroller and Auditor General (CAG) of India.
- Low, K. G. (2015). Melbourne’s response to the Millennium Drought: Institutional change and policy learning (Water-PIRE Report). Irvine, CA: University of California, Irvine.
- Melbourne Water. (2009). Water Supply-Demand Strategy for Melbourne 2008. Melbourne: Melbourne Water Corporation.
- Institute for Sustainable Futures, University of Technology Sydney. (2013). Water Conservation and Efficiency Measures in Melbourne During the Millennium Drought. Research Report for Melbourne Water.
- Malkapur Municipal Council. (2019). 24×7 Water Supply Project: Implementation and Performance Report. Malkapur: Public Health Engineering Department, Government of Maharashtra.
- Jusco Ltd. (2020). Annual Performance Report: Jamshedpur Water Supply and Sewerage Services. Jamshedpur: Tata Steel Foundation. The utility operator’s report highlights the reduction of non-revenue water from 36% to 10% through systematic leak detection, pipe replacement, and metering initiatives between 2015-2020.
