Wastewater reuse, a known alternative, lacks strong policy and institutional framework in India. There are various non-potable uses in urban areas that can be supplemented with treated wastewater for reducing the pressure on freshwater resources. The current policies in India promote use of treated wastewater for agricultural irrigation and industrial use, but they suggest no measures for reuse of the same in urban areas. The research aims to identify whether the water available in an urban area is used sufficiently and fulfils the needs of the city residents in a sustainable manner and advocates wastewater reuse as a possible option for improving its use efficiency. The study reviews the water-use efficiency of Bhopal city using performance indicators. The results suggest that Bhopal city receives enough supply for its needs; however, it is majorly dependent on its external resources. It is thus imperative that the city reuse its water efficiently and look for wastewater as an alternative source. The research suggests a measurability framework for the local administration to set and identify targeted water use and reuse options within its periphery. The study also identifies certain shortcomings in existing policies and suggests measures to promote judicious reuse of wastewater in urban areas.