Jal Jeevan Mission 2.0 to unlock Rs 3 lakh crore O&M opportunity

Jal Jeevan Mission 2.0 is poised to create a Rs 3 lakh crore operations and maintenance (O&M) opportunity, according to an ICRA report. The mission's total outlay is now Rs 8.69 lakh crore, with the deadline extended to December 2028.

The second phase of the Jal Jeevan Mission (JJM 2.0) is projected to unlock an operations and maintenance (O&M) opportunity valued at approximately Rs 3 lakh crore, according to a report by ICRA. The ratings agency noted that a higher financial outlay and an extended implementation timeline are expected to support the Engineering, Procurement, and Construction (EPC) sector through this transition.

Mission Expansion and Increased Outlay

The report stated that the total outlay for the mission has been increased to Rs 8.69 lakh crore from the previously approved Rs 3.60 lakh crore. Within this, the Centre's share rose to Rs 3.59 lakh crore from Rs 2.08 lakh crore. To achieve the goal of 100 per cent coverage for 19.4 crore rural households, the implementation deadline was extended to December 2028 from the initial 2024 target.

Since its inception in 2019, household tap water connections increased nearly five-fold, rising from 323.6 lakh to 1,582.3 lakh, which brought rural coverage to over 81 per cent by February 2026.

Shift in Focus for JJM 2.0

According to ICRA, the shift in emphasis under JJM 2.0 targets "reliable service delivery through O&M systems, water quality monitoring and digital oversight through the Sujalam Bharat platform."

Execution and Financial Challenges

While infrastructure build-out remains significant, the report highlighted a divergence between budgeted outlays and actual expenditure starting from FY2025. Large cuts at the revised estimate stage during this period underscored "execution bottlenecks, quality concerns, and a policy shift towards sustainable service delivery."

Vendor Payment and Working Capital

The financial environment for vendors remains a point of focus, as the receivable cycle currently stretches beyond six months across several states. ICRA expects this cycle to streamline and reduce to below 60 days by September 2026.

The report further explained that JJM projects are "inherently working capital intensive due to sizeable upfront inventory commitments and a low quantum of mobilisation advances," a situation often aggravated by delayed realizations of receivables and retention monies.

Opportunities for EPC and Manufacturing Sectors

EPC players are expected to benefit from O&M contracts that offer "stable, annuity-like cash flows, albeit at lower margins." Organized manufacturers capable of scaling production in the PVC and HDPE segments are also positioned to gain. The ratings agency noted that the focus on functionality and uptime favours branded, technically capable manufacturers.

State-wise Progress and Overall Impact

While 11 states and Union Territories have already achieved 100 per cent coverage, eight remain below the 80 per cent mark. The report noted that despite these variations, the mission continues to deliver "meaningful gains in rural health, time savings, and livelihoods" through its evolving administrative and technical frameworks. (ANI)

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