Chief Minister Arvind Kejriwal announced free sewer connections for residents of the city if they apply for one before March 31, 2020.
Under the 'Mukhyamantri Muft Sewer Yojna', nearly 2.31 lakh people who do not have a sewer connection will benefit, Kejriwal said, adding that it will also prevent flow of untreated sewer into the Yamuna river.
The scheme will cover 787 colonies where sewer lines have been laid.
"In some areas where sewer lines have been laid, some people do not have these connections. Delhi cabinet has decided to provide free connections by waiving all charges," he said.
Delhi government will bear the entire cost of new connections, and an average household will save Rs 15,000 on this account, said the chief minister.
A government statement said households living in various sizes of houses will save up to Rs 2500 (25 sq mere), Rs 5,000 (50 Sq metre), Rs 7,500 (75 sq metre), Rs 10,000 (100 sq metre), Rs 15000 (150 sq metre) and Rs 20,000 (200 sq metre).
"For decades, governments had not even laid sewer lines in these colonies. Not only did they keep the people of Delhi deprived of basic facilities, but they also caused the Yamuna to get polluted. Now, the people of Delhi will get essential services and we can also clean the Yamuna," he said in a tweet.
High development charges prevented people from installing sewer connections, he claimed.
"We had decreased the development charges from Rs 500 to Rs 100 per square metre for sewer connections, but the individual charges still pinched people. Now, the Delhi cabinet has decided to provide relief to those people who have not taken the sewer connections despite a sewage line in their areas," he said.