The dam provides multipurpose benefits of irrigation, drinking water supply, flood control and hydropower generation.

[2] The multipurpose Upper Wardha Dam project is considered the lifeline for Amravati city, and Morshi and Warud Talukas.

From its origin, at an altitude of 785 m (2,575 ft) in Satpura Range from the Multai plateau in Betul District of Madhya Pradesh, the river flows 32 km (20 mi) in Madhya Pradesh and then enters into Maharashtra near the Multai plateau of the Satpuda range.

[2][3] The path of Monsoon depressions that originate in the Bay of Bengal descends directly on the Upper Wardha catchment area.

For such a flashy type of catchment with varying topography, runoff estimates at dam site are an involved process.

Their demand centred on right to access the Upper Wardha dam (the Nal Damayanti Sagar) reservoir for fisheries as a measure of rehabilitation.

[8][9] The irrigation system of the project was planned to irrigate lands through the right bank main canal of 95 km (59 mi) length and left bank main canal of 42.4 km (26.3 mi) with complement of a system to carry the water to the fields.

Jowar, cotton, soybean, tur, ground nut, and oranges are the major crops grown in the command area.

[4] To ensure better irrigation planning to ensure supplies reach the tail end of the canal system even during the low flow years, a "General Algorithm" model to operate the reservoir with a Rule Curve (reservoir operating rules) in real time with inputs of all variable parameters (such as monthly demands for irrigation) has been developed.

Amravati town is now provided water supply from the Upeer Wardha reservoir supplementing an earlier supply source.. Water supply to the Warud town (a flourishing commercial town about 85 mi (137 km) from Amravati city) is also planned to be supplemented from the Upper Wardha reservoir storage, which will supplement the existing tube well sources and the interim measure of tapping the Shekhdari River as a source.

[11] Another project to divert 4,230,000 cubic metres of water from the Upper Wardha Dam Pandhurna district in Madhya Pradesh has also been approved at a cost of US $18 million.