This article explores two trends which exemplify recent research and thinking in service delivery: first, understanding the role of small‐scale informal providers and second, understanding the politics and governance of service provision. Drawing on field research on urban water in New Delhi, we show that while informal providers fill a gap left by the public utility, residents are captive consumers with limited ability to influence service quality or price. However, this low service level trap can be shifted; and the very seeds of change seem to lie in the evolving relationships between informal providers, residents of informal settlements, politicians and the water utility. The case highlights two factors that enabled the transition: (1) the nature of the service , particularly piped water systems, are more conducive to triggering collective action; and (2) rising political awareness and competition can enable community groups to break out of clientelistic relationships with local politicians.