A recent report ‘Enabling circular economy in used water management in India: A municipal index for assessing urban local bodies’ performance’ by the Council on Energy, Environment, and Water (CEEW) unveils that Haryana, Karnataka, and Punjab stand as leaders in used water management across India. As urban water demand surges and groundwater levels decline, urban local bodies (ULBs) nationwide must enhance the treatment and reuse of used water for non-potable purposes. However, the report underscores a significant obstacle: 90% of ULBs lack targeted financial planning and investment in used water management.

According to 2021 data, only 28% of India's 72,000 million liters of used water undergo treatment. The untreated water was discharged into natural bodies, contributing to river pollution, especially in urban areas. This exacerbates water security concerns amid urban growth. Reusing treated water can alleviate pressure on freshwater sources and bridge the demand-supply gap. By 2050, sewage treatment capacity is projected to reach 80%, yielding over 96,000 million liters per day of treatable water for reuse (Bassi, Gupta, and Chaturvedi, 2023).

To address this, the CEEW report introduces the Municipal Used Water Management (MUWM) Index, assessing 503 ULBs in 10 states that have implemented treated used water reuse policies. This index evaluates ULBs across five criteria: Finance, infrastructure, efficiency, governance, and data and information, categorising them as Aspiring, Promising, Performing, Leading, or Outstanding.

At the forefront, Surat Municipal Corporation and Bruhat Bengaluru Mahanagara Palike are recognised as 'Outstanding' performers, with robust action plans and strong performance in infrastructure and efficiency. State-wise, Haryana and Karnataka lead with comprehensive action plans, followed closely by Punjab and Rajasthan. Notably, eastern states like Jharkhand and West Bengal are making significant strides. However, 60% of ULBs require a more comprehensive approach to used water management, falling under 'Aspiring' or 'Promising' categories.

As per CEEW analysis, the formulation of a dedicated action plan for used water management at the ULB level is a key enabler of their noteworthy performance. For instance, Surat has developed an action plan for the treatment and reuse of used water, which sets reuse targets for the city. Similarly, Bengaluru has formulated a comprehensive vision document for water management in the city, with quantitative and qualitative targets for sewage management. 

“Many Indian cities are now water-stressed. For instance, Bengaluru, which draws most of its freshwater from the Kaveri River and borewells, is currently facing a severe water crisis. Incidents like these in India’s rapidly urbanising regions show the environmental and economic potential of treating and reusing used water for non-potable purposes. Though Karnataka emerges as a frontrunner, it is critical to note that there is a long road to go with no state achieving full scores—the highest being 3.32 out of a maximum of 5,” says Nitin Bassi, Senior Programme Lead, CEEW.

“As Bengaluru runs out of freshwater, reusing used water to its full potential for non-potable purposes will be key in the future. Treated used water has a tremendous market potential—about USD 8 million per day in 2021 alone. The CEEW index provides a crucial baseline for ULBs to prioritise their water action, see the gaps they need to fill and realise this notional market and environmental value,” he adds.

Saiba Gupta, Programme Associate at CEEW, stresses the need for dedicated reuse plans at the ULB level, alongside financially feasible models. The report recommends empowering ULBs, developing comprehensive databases, leveraging national initiatives for finance, and fostering healthy competition among ULBs to mainstream used water treatment and reuse in cities.

The CEEW report further highlights finance as a key concern in used water management. Surat in Gujarat stands out with the top score in finance having adopted different public–private partnership (PPP) models, such as the end-user investment model, to achieve economies of scale and effective risk sharing. Moreover, 78 per cent of ULBs require better governance measures to ensure treatment and reuse of used water. Here, Jaipur emerges as the top-scoring ULB, with its latest city master plan (2025) including sewage-related targets on infrastructural requirements and collection efficiency of the sewerage network.

“The reuse of treated used water is yet to be mainstreamed in Indian cities. As per our analysis, the adoption of a dedicated reuse plan with clear targets and priority areas for reuse at the ULB level is key for improving used water management. A financially feasible reuse model is also essential for ULBs to cover the cost of treatment from revenues generated from implementing reuse projects. This is a vital step towards ensuring water-secure cities,” says Saiba Gupta, Programme Associate, CEEW.

Conclusion and recommendations

While many ULBs assessed using the MUWM Index have shown progress in certain aspects of used water management, the mainstreaming of treated used water (TUW) reuse remains a critical aspect yet to be widely adopted in Indian cities. The following recommendations aim to promote the circular economy approach to urban used water management:

• Empower ULBs to adopt long-term reuse plans: ULBs should be empowered to develop and implement long-term reuse plans aligned with national and state-level policies, such as the AMRUT 2.0's city water action plans. These plans should aim to meet a significant portion of the city's water demand through TUW reuse.
• Enable the development of a comprehensive database to strengthen MUWM:  Access to reliable data is crucial for formulating effective reuse policies. The MUWM assessment framework provides a baseline database for used water management, enabling ULBs to identify areas for improvement and develop strategies accordingly. Regular updates and performance assessments can strengthen this database.
• Leverage existing national initiatives for used water management: ULBs' performance in used water management can be leveraged by central and state governments to provide incentives and support initiatives for effective water management. This aligns with the Government of India's river-centric urban planning approach, emphasising reducing freshwater demand and pollution through efficient water management.
• Promote healthy competition among ULBs: The MUWM Index can foster healthy competition among ULBs, encouraging them to improve their performance in used water management. This competition can further the goal of mainstreaming used water treatment and reuse in cities.

Implementing these recommendations can contribute to enhancing the efficiency and sustainability of urban used water management in India.