Policy Update
Amrutha Lahari Kolluru
Introduction
A decade in, the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) has significantly changed the landscape of water supply, sewage and septage treatment, storm water drainage and green parks and spaces in India. The scheme’s urban reformative strategy is leading a transformational change in India, the world’s largest user of groundwater with 250 cubic kilometers of groundwater consumption every year. (UNESCO World Water Development Report, 2022).
Its motto, to ensure water security, calls on circular economy initiatives to support, supply, rejuvenate and restore the existing water bodies through various initiatives. The circular transition carries urban India from legacy “take-use-dispose” patterns, into a path of sustainable practices that creates resilience to climate change in cities.
This systemic shift links physical water infrastructure with digital monitoring and outcome-based incentives, creating a more integrated framework for urban water governance. It is popularly phrased as ushering in a new model of technological governance, as well as sustainable financing that has reshaped the urban development landscape. (Indian Infrastructure, 2025)
Background
As stated in a recent policy update by IMPRI (AMRUT 2.0 Reforms: Linking Urban Infrastructure Funding with Municipal Performance, 2026), AMRUT addresses the institutional gaps in the Urban Local Bodies (ULBs) and financial and technical constraints. With increasing urban population, the demand for basic infrastructure only increases, leading to stress on extraction and the rejuvenation potential of natural resources. As a matter of fact, a report titled ‘Composite Water Management Index,’ published by NITI Aayog in June 2018, indicates that India is facing the most severe water crisis in its history, with nearly 600 million people experiencing high to extreme water stress (Water Quality Monitoring Advisory, 2024). IMPRI PU: AMRUT 2.0
Water security is, therefore, of great importance in creating policies that address the water rejuvenation landscape. AMRUT 2.0 aims to achieve the same by initiating circular economy
Projects across the cities and states. The scheme, and many other national water development schemes follow circular economy goals as ‘a model of production and consumption that reduces waste water to a minimum by recovering, reusing and recycling water for productive purposes and thereby reducing the pressure on natural water resources’ (National Framework on Safe Reuse of Treated Water, 2022). It is carried out through water source conservation, rejuvenation of water bodies and wells, recycle/ reuse of Treated Used Water (TUW) and rainwater harvesting.
To translate these circular economy principles into practice, AMRUT 2.0 establishes an operational framework spanning baseline planning, wastewater recycling, and local ecosystem restoration.
| Policy Component / Scheme | Primary Focus | Operational Tool | Target Benchmark |
| CWBPs | Data mapping & baseline assessment | City Water Balance Plans | 100% urban asset & gap coverage |
| NRW & ‘Drink from Tap’ | Source reduction & distribution loss | Smart metering & incentives | Reduce NRW below 20% |
| Jal Hi Amrit (JHA) | Wastewater reuse & commercialization | Clean Water Credit System & WRRCs | Star-rating for STPs (3 to 5 stars) |
| SAM 2.0 | Urban aquifer recharge | Shallow Aquifer Mapping | Micro-level hydro-spatial coverage in 75 cities |
| Pey Jal Survekshan | Demand-side evaluation & benchmarking | City assessment competition | Outcome-linked awards & real-time metrics |
Table 1: Compiled from AMRUT 2.0 Operational Guidelines & Jal Hi Amrit Toolkit (2021-2024)
Functioning
City Water Balance Plans (CWBPs), as mandated under AMRUT 2.0 guidelines, comprise details of water sources including water bodies, water treatment and distribution infrastructure, area-wise water coverage etc. It serves as a foundational tool for ULBs to quantify water intake, municipal distribution, sewage output, and supply-demand gaps. They map consumption habits, pricing gaps, assets and stress regions that could aid in a strategic approach towards rejuvenation and restoration in the city and state, and ascertain financials appropriately. (AMRUT 2.0 Operational Guidelines, 2021)
Building on this baseline, some of the major reforms are to reduce Non-Revenue Water to the below 20% benchmark, recycle treated used water to meet at least 20% of the city’s demand and 40% of industrial demand at state level, 24×7 water supply with ‘Drink from Tap’ facility, among others. Without these reforms, it is futile to pursue circular economy initiatives to promote water security.
This circularity is operationalised through Jal Hi Amrit. While NITI Aayog’s strategy paper (Reuse of Treated Wastewater in Urban/PeriUrban Agriculture in India, 2023) establishes the nationwide market valuation of Treated Used Water (TUW) to be Rs. 1.44 lakh crores by 2050, AMRUT 2.0 provides the operational, financial, and institutional mechanics needed to unlock this circular economy value chain through the scheme.
It supports a clean water credit system that incentivises the Sewage Treatment Plants (STPs) by financing their projects on protecting water bodies by systematically treating millions of litres of used water before it is discharged into water bodies and the environment. The rating system classifies STPs into three categories of 3 stars, 4 stars and 5 star ratings each receiving an incremental financial incentive.
Table 2: Jal Hi Amrit, PIB, 2024
Alongside used water reuse, surface water body rejuvenation focuses on the conservation and augmentation of local water sources, including the rejuvenation of surface water bodies, lakes, ponds, and wells, along with rainwater harvesting. Through CWBPs, rejuvenation projects are identified and prioritised in the City Water Action Plan (CWAP) and State Water Action Plan (SWAP) with technology sub-missions, another crucial component in the AMRUT 2.0 scheme. They hold the responsibility of implementation and finally, the rejuvenated water bodies can serve as secondary sources or storage for recycled water.
One such sub-mission, Shallow Aquifer Mapping (SAM), was launched by the NIUA and subsumed as Sub-Mission under AMRUT 2.0 in the years 2022-24. It is a comprehensive urban aquifer mapping project that seeks to leverage innovative technology to urban groundwater management, integrating aquifer mapping, recharge strategies, and urban planning to cover 75 cities with a systematic, scalable model of intervention. The success of the Pilot project in 10 cities mobilised the utilisation of the sub-mission into the larger scale in which it functions currently.
Tying these efforts together institutionally, the ultimate objective of promoting sustainable and circular management of used water and biosolids management, revolves around the Water Resource Recovery Cells (WRRCs). These cells ensure that used water recycling and biosolids management are incorporated in all aspects of the project wherever possible. They are composed of representatives from ULBs, agriculture, industries power, public health and State Pollution Control Board departments. Upon the creation of a mandatory Escrow account, the WRRCs deploy funding and improve STP performance. Their unique horizontal form of governance integrates Industrial, agricultural, municipal and power sectors, which is a departure from what was once a siloed, regulatory model (Jal Hi Amrit Toolkit, 2024).
Finally, where the National Progress Comparison Report exposes the gap between administrative and physical progress, the ‘Pey Jal Survekshan’ scheme closes that gap from the demand side by rewarding cities for measurable outcomes rather than paperwork completion, and giving the public a city-wise benchmark against which the “paper progress” identified throughout this piece. It is a city assessment framework that fosters a healthy competition among ULBs by considering parameters like access, quality & quantity of water, used water & waste water treatment, rejuvenation & conservation of water resources and operational and financial sustainability.
Performance
The exercise of aggregating CWBP into State level Water Balance Plans, however, occurs as a compliance measure. The requirements stated in the guidelines, once fulfilled allow the release of funds but implementation is delayed. This can be evidenced through the recent AMRUT 2.0 National Progress Comparison Report, where out of a total of 8,777 projects approved, 8,418 have their Detailed Project Reports (DPRs) ready and 7,718 projects have received approval of contract. However, the project completion stands at a magnitude of 2,833 projects, which represents only 5.8% of the total finance.
This gap is starker still at the sectoral level, where high-budget projects lag at 25% physical completion while small, fast-turnaround works (parks, green spaces, local pipeline fixes) reach 75%, concentrating financial risk precisely where progress is weakest and masking real achievement behind nominal administrative milestones.
Water body rejuvenation shows the same pattern. Out of a total of 2951 rejuvenation projects, 2769 projects gained DPR approval. Out of which, 1156 projects secure the completed status with a total financial outlay of 1091 crores. Water body rejuvenation registers the healthiest completion rate 39.2% among the four project categories. The relatively high volume of completed water body projects compared to their low monetary footprint indicates that completion is largely restricted to small-budget and low-complexity interventions. (AMRUT 2.0 National Progress Comparison Report, 2026)
Table 3: AMRUT 2.0 National Progress Comparison Report, 2026
Beyond the report’s own data, a similar stagnation marks the NRW target. The overall estimate of NRW in India lies between a range of 30% to 50% (Varatharajan, 2020 & HPEC, 2011). According to a Standing Committee Report, there is a lack of progress in reducing NRW level despite providing financial incentives to states and ULBs that achieve NRW reduction below 20%. The Committee recommended that the Ministry work with states and ULBs, put the incentive system into use, and publish city-wise NRW levels and smart metering status.
Addressing this loss is central to Drink from Tap. By embedding smart technology, source augmentation, and last-mile household connectivity into fund allocation, the mission seeks to transition cities from unmetered distribution losses toward loss-controlled, digitally monitored water networks. This is so that the functional mandate for universal piped water supply can be achieved.
Institutionally, WRRCs are the backbone of the circular water economy. While the Water Credit System provides the financial incentive and CWBPs provide the baseline data, WRRCs deliver the operational governance required to make wastewater reuse commercially viable and scalable.
These performance indicators have however been a generic critic that is posed against all government laden policies and schemes. While it is important to understand the shortcomings and adjustments, an outlook on progress shouldn’t be denied. It is due to the seamless integration of the sub-missions that the project’s goal of circularity and real-time outcome measurements, that brought AMRUT 2.0’s credibility of ‘success’ which is demonstrated through its strategic implementation and dynamic approaches.
Emerging Issues
Identified from the article’s stand-point and performance analysis, the following are the challenges: –
- Against the High Powered Expert Committee’s ₹3.2 lakh crore investment benchmark for urban water infrastructure (2012–2031), combined central sanctions across AMRUT and AMRUT 2.0 stand at approximately ₹1.6 lakh crore which only covers 50% of projected capital needs.
- ULBs move swiftly through paper stages but falter at on-ground execution, land acquisition, and engineering delivery. CWBP completion thus reflects procedural compliance rather than genuine dynamic decision support.
- ULBs remain over-dependent on external funding and support agencies, compounded by a shortage of skilled workforce. This is a structural constraint that limits absorption of even the capital that is sanctioned.
- The costlier projects are disproportionately the ones left unfinished. Water Body Rejuvenation should therefore be read not as an implementation gap but as administratively efficient on paper, unevenly executed in practice, and still exposed to the same concentration of financial risk in its largest, least-advanced project.
- There is a disconnect between initial hydro-spatial data collection and physical ground execution.
- The demand-side resistance compounds the supply-side gap. Farmers remain reluctant to use recycled water for irrigation, fearing it will hurt crop market value, given the lack of scientific consensus on the risks of consuming crops irrigated with treated wastewater.
Way Forward
Consequently, some strategic policy recommendations are: –
- Conduct a comprehensive financial mapping exercise aligning AMRUT 2.0 capital outlays with India’s Vision 2047 urban development targets.
- Formulate a National Urban Wastewater Reuse Policy establishing mandatory off-take zones, paired with standardised quality protocols.
- Shift from milestone-based capital disbursements to outcome-linked financing, tying central grants directly to verified NRW reductions (tracked via smart metering dashboards) and actual volumetric TUW off-take.
- Given that large metropolises and megacities generate the highest volumes of wastewater, circular water economy interventions should prioritise these high-use, high-waste urban geographies first, since success there would meaningfully address the bulk of the national gap rather than spreading limited implementation capacity thin across smaller ULBs.
- Given how limited the 74th Constitutional Amendment has been in actually decentralising city governance, the Centre could consider a fresh Constitutional Amendment to reform metropolitan governance and hand cities more direct control over functions like climate action, public health, and digital infrastructure.
References
UNESCO. (2022). The United Nations world water development report 2022: Groundwater: Making the invisible visible. UNESCO Publishing.
World Bank. (2012, March 6). India’s groundwater: Critical and diminishing. World Bank Group. https://www.worldbank.org/en/news/feature/2012/03/06/india-groundwater-critical-diminishing
Marking a Decade: Mapping 10 years of progress and achievements under AMRUT” — Indian Infrastructure, published October 12, 2025. https://indianinfrastructure.com/2025/10/12/marking-a-decade-mapping-10-years-of-progress-and-achievements-under-amrut/
Tanvi Nerurkar, AMRUT 2.0 Reforms: Linking Urban Infrastructure Funding with Municipal Performance, IMPRI Impact and Policy Research Institute (July 19, 2026). Available at: https://www.impriindia.com/insights/policy-update/amrut-2-0-reforms-linking-urban-infrastructure-funding-with-municipal-performance/
Press Information Bureau. (2024, September 30). Cabinet approves “Jal Hi Amrit” initiative under AMRUT 2.0. Ministry of Housing and Urban Affairs, Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2157432®=48&lang=2
Ministry of Housing and Urban Affairs. (2024). Water quality monitoring and surveillance (WQMIS) advisory. Government of India. https://amrut.mohua.gov.in/assets/Water-Quality-Monitoring-WQMIS-Advisory-Final.pdf
Ministry of Housing and Urban Affairs. (2026). National progress comparison report. AMRUT, Government of India. https://amrut.mohua.gov.in/uploads/National-Progress-Comparison-Report.pdf
Press Information Bureau. (2024, September 30). Backgrounder on AMRUT 2.0 urban water transformation. Ministry of Housing and Urban Affairs, Government of India. https://static.pib.gov.in/WriteReadData/specificdocs/documents/2024/sep/doc2024930405501.pdf
Ministry of Housing and Urban Affairs. (2024). Jal Hi Amrit (JHA) toolkit. AMRUT, Government of India. https://amrut.mohua.gov.in/uploads/JHA_Toolkit.pdf
Ministry of Housing and Urban Affairs. (2021). Operational guidelines for Atal Mission for Rejuvenation and Urban Transformation 2.0 (AMRUT 2.0). Government of India. https://amrut.mohua.gov.in/uploads/AMRUT_2.0_Operational_Guidelines.pdf
National Mission for Clean Ganga. (2021). National framework for safe reuse of treated water (SRTW). Ministry of Jal Shakti, Government of India. https://nmcg.nic.in/writereaddata/fileupload/32_SRTW%20Framework_Final_23_11_2021%20(1).pdf
NITI Aayog. (2023). Revised strategy paper on reuse of treated wastewater in peri-urban agriculture in India. Government of India. https://www.niti.gov.in/sites/default/files/2023-08/Revised_Strategy-Paper-on-Reuse-of-Treated-wastewater-in-peri-urban-agriculture-in-India.pdf
Ghosh, A. (2024). The role of the government in tackling India’s urban water crisis. Observer Research Foundation. https://www.orfonline.org/expert-speak/the-role-of-the-government-in-tackling-india-s-urban-water-crisis
National Institute of Urban Affairs. (n.d.). Water management module 2: Non-revenue water (NRW). Climate Centre for Cities. https://niua.in/c-cube/sites/all/themes/zap/assets/pdf/WATER%20MGT/WM2-%20NRW.pdf
PRS Legislative Research. (2021). Review of AMRUT with emphasis on urban drinking water. Standing Committee on Urban Development Summary. https://prsindia.org/policy/report-summaries/review-of-amrut-with-emphasis-on-urban-drinking-water
National Institute of Urban Affairs. (2022). Shallow Aquifer Management (SAM 2.0): A sub-mission under AMRUT 2.0. https://niua.in/project-details/Shallow_Aquifer_Management_%28SAM_2.0%29%3A_A_Sub-mission_under_AMRUT_2.0
About the Contributor
Amrutha Lahari Kolluru is a graduate with an M.A. in Environmental Economics from the Madras School of Economics. Passionate about policy analysis, climate research, sustainability, and their integration, she aspires to develop evidence-based solutions to environmental challenges.
Acknowledgement
The author extends sincere gratitude to the IMPRI team for their expert guidance and constructive feedback throughout the process.
Reviewers: CB Kavin Adithya and Sandra Menon
Disclaimer: All views expressed in the article belong solely to the author and do not necessarily represent the views or policies of the organisation.
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