This paper highlights the importance of water valuation and pricing for sustainable and efficient water allocation and management in India. An efficient water-pricing mechanism could be a tool to address the impending crisis of water scarcity, which necessitates a robust, objective, and holistic valuation technique. Every unit of water consumed for economic purposes has an ecological footprint, and this opportunity cost or externality factor needs to be considered. This paper discusses the importance of considering the bundle of ecosystem services provided by water and emphasises the necessity of capturing externalities through inclusive water pricing. It assesses the Indian scenario, revealing disparities in water pricing across states and the urgent need for an efficient water tariff system to mitigate the growing demand-supply gap. The paper examines two cases in this context: (i) a climate-resilient priced drinking water facility in the Sundarbans that adopts a multifaceted approach to water tariffs that balances efficiency, equity, revenue generation, and sustainability while considering various socioeconomic factors and environmental costs; and (ii) a case in the Upper Ganges demonstrating how the valuation of ecosystem services associated with flow regimes can help in efficient water management. W ater scarcity is a harsh reality in India, especially during the dry season, but the situation has not been captured in terms of annual water availability. India's projected water availability per capita was 1486 m 3 in 2021, and is slated to decline to 1367 m 3 by 2031. 1 In terms of the Falkenmark indicator, 2 this reflects water stress and not water scarcity. a This is lower than the global average of 5500 m 3 per capita. 3,4 If current trends continue, India is on the path to becoming a severely water-scarce country, especially since, while 16-17 percent of the world's population resides in the country, the landmass possesses only 4 percent of global freshwater resources. 5 The water demand-supply gap has three aspects, two temporal and one spatial. The first temporal aspect is the seasonality of annual water availability and demand, with dry season availability being substantially lower than the demand. Second, consistent population growth, urbanisation, and the diverse emerging needs for water are long-term demand drivers, with water availability and supply constraints being created by climate change and declining per-capita availability. The third aspect is the massive regional disparity in water availability in India, with some regions better endowed with water resources than others. 6 Given India's rapidly growing population, demand drivers will emerge amid the increased need for food, drinking water, sanitation, and development facilities. However, the constraints on water supply will be even more binding due to worsening water pollution, frequent droughts resulting from climate change, and poor water resource management systems causing the overuse and depletion of groundwater. Global warming further aggravates these problems, severely threatening future water availability in the region. There is extensive use and wastage of water in agriculture, 7 even as many urban centres remain water stressed. Existing literature reveals that the 'business-as-usual' way of managing water is unsustainable and can lead to a As per the Falkenmark indicator, annual per-capita water availability of less than 1,700 m3 is considered to be a water-stressed condition, while annual per-capita water availability below 1,000 m3 is considered to be a water-scarcity condition.