This article argues that the transformation of a Mumbai neighborhood from municipal housing colony into illegal slum has been facilitated by the politically mediated deterioration and criminalization of its water infrastructure in the context of liberalization-era policy shifts. These policy shifts hinge upon a conceptual binary that posits the unplanned, illegal and informal ‘slum’ as the self-evident conceptual counterpoint to a planned, formal, ‘world-class’ city. The story of Shivajinagar Bainganwadi problematizes this assumption by evidencing the deeply political and highly unstable nature of this binary — and thus insists upon an account of the shifting political and economic stakes imbued in these categories. The case of Shivajinagar Bainganwadi reveals that the neighborhood’s emergence as an illegal slum has been mediated by the liberalization-era politics that have come to infuse the neighborhood’s water pipes — dynamics that have produced the illegality/informality of the neighborhood as a discursive effect.