Appropriate irrigation scheduling, along with proper nutrient management practice for direct seeded rice (DSR), are very much essential to attain higher water use efficiency. Huge amounts of municipal waste are been produced every year and these wastes are left untreated and have caused many environmental hazards. However, these wastes can be converted into potential manures for crop production when enhanced with microbial consortia. Concerning these, the current research was carried out to know the effect of compost of enriched municipal soil waste (E-MSWC) with suitable irrigation scheduling on growth, yield, microbial activity, and water use efficiency of the DSR grown under Indo-Gangetic plains during two consecutive rice seasons of 2017–2018 and 2018–2019 at Varanasi, India. From the experiment, it was found that E-MSWC applied at 10 Mg·ha−1 along with 75% recommended dose of fertilizer (RDF) was capable to improve growth, yield, soil microbes, and water use efficiency (WUE) of rice. Amongst different enriched MSWC, the consortia (blend of N-fixing, P and Zn-solubilizing bacteria and Trichoderma) enriched MSWC was found to be the most effective. Concerning, different irrigation scheduling, it was observed that 50 mm cumulative pan evaporation (CPE) based irrigation was the most suitable as compared to providing irrigation at 75 mm CPE. Comparing rice varieties used in the research, the rice variety Swarna has appeared as a better choice in terms of yield and WUE than the variety, Sahbhagi. Thus, it can be recommended that irrigation at 50 mm of CPE in conjunction with 75% RDF + E-MSWC (consortia) at 10 Mg·ha−1 could improve the water use efficiency of rice grown in Indo-Gangetic plains.