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Urban water demand is rapidly growing in India due to high growth in urban population and rapid industrialization. Meeting this demand is a big challenge for the urban planners in India. Incidentally, the large urban areas are experiencing faster growth in population, and most of them are in arid and semi arid regions, which are naturally water-scarce. As a result, water supplies from local water resources including aquifers are falling far short of the high and concentrated demands in most urban areas. Under such situations, these large cities have to rely on distant large reservoirs. The analysis of 302 urban centers shows that cities with larger population size have much higher level of dependence on surface water sources. Also, greater the share of surface water in the city water supplies, higher was the level of per capita water supply. Multiple regression models are estimated for Class I cities and Class II towns in India. The results show that Population Elasticity of Water Supply (PEWS) change with time and space-for Class I cities it was 1.127 in 1988, whereas that with respect to 1999 population is 1.289. It also shows that Class I cities have better water supply (PEWS is 1.127 in 1988 and 1.289 in 1999) than Class II towns (PEWS is 0.396 in 1988 and 0.675 in 1999). Given the structure and pattern of urban population growth, economic conditions and water demands, large reservoirs will have a much bigger role in meeting urban water supply needs.