This paper explores the complex interactions that occur as formal policies are interpreted and utilised to develop water management plans in peri-urban Delhi. With an emphasis on people's participation in decision making, the paper examines some of the disjunctures between formal assumptions about water management in peri-urban areas and practices on the ground. In doing so it attempts to reveal some of the key processes responsible for social fragmentation of services. The paper describes informal coping strategies adopted by poor and marginalised peri-urban communities with little or no access to formal provision. Within this, the role of ‘hidden’ interactions with the formal system are highlighted in the context of failures of formal participatory platforms. The paper argues that enhanced understanding of the policy process, and the alternative arrangements that emerge in response to its shortfalls, could be important contributory factors in identifying realistic intervention strategies for enhanced, more socially just, water management in peri-urban situations.