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Each year, more than 300,000 children in India under the age of five years die from diarrheal diseases. Clean piped water and improved sanitation are known to be effective in reducing the mortality and morbidity burden of diarrhea but are not yet available to close to half of the Indian population. In this paper, we estimate the health benefits (reduced cases of diarrheal incidence and deaths averted) and economic benefits (measured by out-of-pocket treatment expenditure averted and value of insurance gained) of scaling up the coverage of piped water and improved sanitation among Indian households to a near-universal 95% level. We use IndiaSim, a previously validated, agent-based microsimulation platform to model disease progression and individual demographic and healthcare-seeking behavior in India, and use an iterative, stochastic procedure to simulate health and economic outcomes over time. We find that scaling up access to piped water and improved sanitation could avert 43,352 (95% uncertainty range [UR] 42,201–44,504) diarrheal episodes and 68 (95% UR 62–74) diarrheal deaths per 100,000 under-5 children per year, compared with the baseline. We estimate a saving of (in 2013 US$) $357,788 (95% $345,509–$370,067) in out-of-pocket diarrhea treatment expenditure, and $1646 (95% UR $1603–$1689) in incremental value of insurance per 100,000 under-5 children per year over baseline. The health and financial benefits are highly progressive, i.e. they reach poorer households more. Thus, scaling up access to piped water and improved sanitation can lead to large and equitable reductions in the burden of childhood diarrheal diseases in India. [ABSTRACT FROM AUTHOR]