The state cabinet has given green light to water supply and sanitation projects worth `2,800 crore in collaboration with the World Bank, the government said on Wednesday.
Around `1,800 crore would be spent on water supply, while the rest would be spend on constructing toilets.
About `20 crore would be spent only in Fatehgarh Sahib to construct toilets in more than 12,500 houses.
According to an official spokesperson, during a meeting at Bachat Bhawan water supply and sanitation minister Surjit Singh Rakhra said Fatehgarh Sahib would be the first city in Punjab and the second in India to provide access to clean drinking water and covered toilets to all the houses.
Of the `1,000 crore for sanitation, Rakhra said, 40% would be provided by the World Bank and the remaining would be funded by the Centre.
Rakhra said village panchayat water supply and sanitation committees would be made to look over the project.
Through bank accounts, each home would get grant of `15,000 in two installments of `6,000 and `9,000 and this amount would be transferred in the committees' bank accounts through online process by the concerned sanitation officer.
The minister said a state-wide survey conducted by the sanitation department till March 31, 2015, concluded that there are 6.25 lakh houses in the state that are still deprived of toilets.
He also appealed to the public to cooperate with the administration in spreading awareness of the need to use covered toilets.