- The 16th Finance Commission grant concentrates resources in few cities, enabling higher per-city investment in drainage and wastewater infrastructure.
- The grant focuses on both wastewater and stormwater. This is an opportunity for cities to focus more on stormwater since wastewater was also covered under many previous schemes.
- Cities need to move away from fragmented, project-based interventions and adopt an integrated street–nallah–wetland approach, ensuring clear separation of stormwater, sewage, and drinking water systems to reduce flooding and contamination risks.
- The views in this commentary are that of the author.
The Sixteenth Finance Commission’s special infrastructure component grant is one of the most targeted urban water investments in recent years. It allocates ₹561 billion for drainage and wastewater upgrades across 22 cities with populations of one to four million.
India has seen large urban water investments before. As per an internal compilation done by Janaagraha based on union budget documents from 2014-2026, Atal Mission for Rejuvenation and Urban Transformation (AMRUT) allocated around ₹670 billion across two phases, and the Swachh Bharat Mission (Urban) about ₹244 billion. But those programmes were spread across hundreds — even thousands — of towns. AMRUT 2.0 alone extended to nearly 4,700 cities and towns. Funding was, by design, dispersed.
This is the first clear opportunity under the 16th Finance Commission (FC) grant for the targeted intervention. It concentrates ₹561 billion in only 22 cities. The intensity of funding per city and per capita is therefore far higher than under earlier missions. If distributed evenly across the population, cities such as Pune, Jaipur, and Lucknow could receive upwards of ₹40 billion, while Madurai, Raipur, and Jodhpur could receive around ₹15 billion.
The scale is comparable to marquee infrastructure projects. Lucknow’s Phase 1B metro, for example, has received ₹14.50 billion under the union budget, against a total cost of around ₹58 billion. In comparison, its estimated share under the FC grant is around ₹46 billion.
The second opportunity lies in what the grant prioritises: not just wastewater, but drainage. Earlier missions largely focused on wastewater. Flooding, despite its growing frequency, has rarely received structured attention. Drainage funding has therefore tended to be reactive — desilting after heavy rains, rebuilding collapsed stretches, or constructing isolated ward-level drains.
Urban flooding’s rising economic cost
Yet the economic costs of urban flooding are far from marginal. A 2025 World Bank assessment estimates that urban flooding currently causes approximately $4 billion in annual losses in India — roughly 0.15% of GDP — and that this is projected to rise to $14–30 billion by 2070 without systemic intervention. If wastewater has benefited from a decade of mission-backed investment, this grant creates space to correct the imbalance by strategically investing in drainage — the more climate-sensitive and underfunded part of the urban water system.
This structural gap in drainage funding is visible in basic stormwater coverage. A 2019 estimate by the Ministry of Housing and Urban Affairs states that only 20% of the country’s urban road network is covered by stormwater drains. In Hyderabad, approximately 1,300 km of stormwater drains serve a road network exceeding 9,000 km. In smaller cities, coverage is often lower. Flooding, therefore, is not just about extreme rainfall, but about incomplete networks.
This combination — concentration of funds on 22 cities and on drainage — gives cities the rare chance to think in systems rather than segments. At present, both drainage and wastewater planning are fragmented.
Few cities have comprehensive maps showing how rainwater, sewage, and natural channels connect across the entire city. Even large metros struggle: the Comptroller and Auditor General (CAG) found that Bengaluru lacks a single reliable, citywide inventory/as-built record of its stormwater drains (with sewage routinely mixing in), while Chennai has mapped only ~15% of its stormwater network, leaving connectivity and capacity unclear. These gaps are more prevalent in mid-sized cities. CAG’s audit across Odisha’s municipal corporations noted the absence of stormwater drainage master plans and major sewerage gaps feeding flooding and untreated discharge. As a result, projects are typically taken up one neighbourhood at a time, without fully understanding downstream effects. So, widening or rebuilding a drain in one area often pushes water to another. The problem shifts; it does not disappear.
Design practices compound this weakness. Many cities still rely on box drains — rectangular concrete trenches built along property edges. These drains frequently carry both rainwater and sewage, including wastewater from homes. Because they sit next to compound walls, water supply pipes entering properties often cross through or over them. When sewage and drinking water lines run in close proximity, any crack, leak, or poorly repaired joint can create contamination risks.
The recent water supply contamination incident in Indore — a city often cited for sanitation improvements — underscores this vulnerability. With nearly 72% of urban India’s sewage still untreated and flowing into open drains, nallahs, and lakes. In such a context, spatially separating rainwater, sewage, and drinking water systems must become a basic design principle rather than an afterthought.
Rebuilding the street–nallah–wetland chain
The street is the first point where rain falls and begins to move. Drains at this level must move water quickly and safely. One way to do this is by replacing box drains with a pipe-and-chamber system — underground stormwater pipes connected to chambers that collect road runoff and channel it downstream. It can enable rapid evacuation from streets. More importantly, such systems allow vertical and horizontal separation of stormwater drains, drinking water lines, and sewer lines, reducing the risk of contamination.
But streets can do more than carry water away. Green features such as planted swales, rain gardens, and permeable footpaths can slow runoff and allow infiltration. Global studies show such measures can reduce surface runoff by 54–98%.
Consider Portland, United States, where SW 12th Avenue Green Street transformed an ordinary asphalt road into a living stormwater system. Kerbside vegetated planters now capture, clean, and slow runoff, managing about 180,000 gallons of stormwater runoff annually and reducing peak flow by over 70%. Research from São Carlos in Brazil, whose tropical climate and prolonged monsoon season mirror conditions in many Indian cities, offers similar lessons. Bioretention basins installed along asphalt roads, composed of layered soil and gravel topped with light planting, have been shown to capture on average 65% of annual runoff.
For Indian cities that face flooding during monsoons and water scarcity in summer, this dual function — flood reduction and groundwater recharge — is especially valuable.
The second link in the chain is the network of nallahs — larger open channels that collect water from multiple neighbourhoods. In many cities, these channels are encroached upon or disconnected from roadside drains. Restoring these linkages is essential. Street drains must discharge into nallahs at planned points, not haphazardly.
Nallahs themselves should be cleaned, protected, and strengthened using nature-based approaches — such as decentralised treatment units near sewage outfalls to improve water quality, and gabion walls or stone pitching to stabilise embankments instead of fully concrete sections. These measures allow greater filtration and groundwater recharge during peak flows, while reducing pressure on downstream storage.
The final link is wetlands — lakes, ponds, and rivers that act as the city’s natural storage and recharge systems. Where nallahs discharge into these water bodies, simple treatment systems can prevent polluted water from directly contaminating them.
For this shift to move from idea to impact, cities must translate the street–nallah–wetland logic into sequenced projects mapped to the overall catchment. Plans must account for how water moves across the entire catchment, not just within a ward. Designs must be coordinated and practical. Contracts must reflect this integrated vision.
Only when the hydraulic chain is rebuilt end-to-end — on drawings, in budgets, and on the ground — will this ₹561 billion allocation move beyond expenditure and become the foundation of urban resilience.
The author is an associate manager, urban policy at Jana Urban Space Foundation.
Banner image: A person wades through the September 2025 floods in New Delhi to carry water for residents stuck in their homes. (AP Photo/Manish Swarup)
