The initiation of the growth process in the rural economy in India, which is predominantly agriculture-based, needs optimum allocation and careful management of scarce water resources for irrigation. Using primary data, the impact of a tripartite institutional framework—comprising a non-governmental organisation, the funding agency, and the people (forming a community-based organisation)—on rural sustainability is examined. Tobit analysis is used to evaluate the impact of participation on rural sustainability. The results establish that community participation is critical in enhancing rural sustainability in terms of managing indigenous water harvesting structures like johads.