Water scarcity poses a severe challenge to agricultural sustainability, particularly in arid and semi-arid regions. Recycled water (RW) use in agriculture offers a viable alternative to freshwater resources; however, concerns regarding water quality often limit its adoption in developing countries. Indirect groundwater recharge via soil aquifer treatment (SAT) using treated domestic wastewater has been widely implemented, but rising energy and pumping costs have renewed interest in direct RW irrigation. Thus, this study systematically compares direct RW irrigation with indirectly recharged borewell water (IRBW) and rainfed borewell water (BW) in terms of irrigation water quality, soil physicochemical-microbial properties, and crop performance. Field-scale experiments employing flood irrigation were conducted across five crop types. Although RW exhibited minor variations in physicochemical parameters, all values remained within National Green Tribunal (NGT) guidelines. Comparative assessment revealed no adverse impacts of RW on soil physicochemical characteristics or microbial diversity. Crop agronomic parameters were largely comparable across treatments, with RW-irrigated crops showing enhanced germination rates and higher pigment concentrations in selected crops. Additionally, RW irrigation resulted in marginally increased micronutrient content in crops, contributing to improved yields, without significant effects on microbial load or post-harvest shelf life. No accumulation of heavy metals was detected in either soils or harvested produce. Overall, the findings demonstrate that adequately treated RW can serve as a safe and effective substitute for freshwater in direct agricultural irrigation, offering substantial energy savings by eliminating additional pumping requirements. This approach supports circular economy principles and enhances water-use efficiency in water-scarce regions, aligning with Sustainable Development Goals (SDGs) 2, 6, 11, 12, 13, and 15.