This study examines the role of Maithon Dam in addressing rural water scarcity in Bathanbari and Sadhna villages of West Barddhaman, alongside significant land use and socio-economic changes between 1991 and 2021. Both villages experienced dramatic declines in agricultural land (Bathanbari from 9.76% to 0%, Sadhna from 50.27% to 8.54%) due to rapid urbanization, industrial expansion—particularly coal mining growth in Sadhna—and government housing initiatives like PMAY-Gramin. Bathanbari benefits from a substantial increase in waterbodies (from 20.42% to 52.62%), linked to the dam’s influence, while Sadhna shows severe wetland loss and increased pollution, reflecting uneven water resource distribution. Household surveys reveal that Bathanbari residents heavily rely on unsafe surface water sources and practice open defecation (68%), whereas Sadhna enjoys better access to tap water (73%), improved sanitation, and indoor bathing facilities, highlighting disparities in infrastructure and health outcomes. Despite the dam’s critical contribution to water availability, infrastructural gaps and uneven water distribution limit its full potential. The findings underscore the necessity of integrating dam-based water supply with improved irrigation, wetland conservation, and community-driven solutions to ensure equitable access, enhance agricultural productivity, and promote sustainable rural development in peri-urban regions.