India hosts two-thirds of the global population defecating in the open and faces a worrying trend of districts declared ‘water scarce’. This paper aims to assess the costs and health benefits of sanitation interventions undertaken by the National Rural Drinking Water Security Pilot Project in India between 2012 and 2015. To achieve this goal, a pretest–posttest control group study was undertaken in two study areas located in Karnataka and Uttar Pradesh states. Full software and infrastructure costs were included as well as health endpoints, sourced from Primary Health Centers. In Karnataka, latrine coverage of households increased from 16% to 59% in villages with high level of interventions, and from 7% to 18% in villages with lower levels of intervention. In Uttar Pradesh, coverage increased from 33% to 70% in high intervention villages and from 27% to 39% in the low intervention villages. We found health-related net benefits of USD 13 and USD 10 per person per year and benefit–cost ratios of 2.5 and 5.0 in Karnataka Uttar Pradesh, respectively. Given the positive economic returns on the intervention in culturally heterogeneous sites of southern and northern India, this intervention has potential for bringing significant benefits to the Indian population.