Groundwater is an essential water resource in the current era, and studying its sustainability and management is highly necessary nowadays. In the current area of research interest, the reduced mean annual Sutlej River flow, the increase in the population/built-up areas, and enhanced groundwater abstractions have reduced groundwater recharge. To address this issue, groundwater recharge modeling through ponding of the Sutlej River was carried out using a modular three-dimensional finite-difference groundwater flow model (MODFLOW) in a 400 km² area adjacent to Sutlej River. The mean historical water table decline rate in the study area is 139 mm/year. The population and urbanization rates have increased by 2.23 and 1.62% per year in the last 8 years. Domestic and agricultural groundwater abstraction are increasing by 1.15–1.30% per year. Abstraction from wells and recharge from the river, the Fordwah Canal, and rainfall were modeled in MODFLOW, which was calibrated and validated using observed data for 3 years. The model results show that the study area’s average water table depletion rate will be 201 mm/year for 20 years. The model was re-run for this scenario, providing river ponding levels of 148–151 m. The model results depict that the water table adjacent to the river will rise by 3–5 m, and average water table depletion is expected to be reduced to 151 to 95 mm/year. The model results reveal that for ponding levels of 148–151 m, storage capacity varies from 26.5–153 Mm³, contributing a recharge of 7.91–12.50 million gallons per day (MGD), and benefiting a 27,650–32,100-acre area; this means that for areas benefitted by dam recharge, the groundwater abstraction rate will remain sustainable for more than 50 years, and for the overall study area, it will remain sustainable for 7–12.3 years. Considering the current water balance, a recharging mechanism, i.e., ponding in the river through the dam, is recommended for sustainable groundwater abstraction.