The major farming system in India is the rice-wheat system, however it is no longer sustainable due to issues with soil health and climate change. The irrigated rice-wheat system's high yields have resulted in the production of vast amounts of agricultural leftovers. The frequent burning of rice straw in north-western India results in nutritional losses and significant air pollution that is harmful to human health. Crop residue management innovations can aid in achieving sustainable productivity to prevent straw burning, enable farmers to use less fertiliser and water, and lower risks associated with climate change. Crop residues contain significant amounts of plant nutrients, and wise use of these nutrients would improve the management of nutrients in the rice-wheat system. Long-term residue recycling studies have shown changes in the soil's physical, chemical and biological health. Another option for the management of crop residues is to use some of the excess residue for the production of biochar, which can be used to improve soil health, increase nutrient use efficiency, and decrease air pollution. Other options include mushroom cultivation, which can turn unusable crop residues into valuable food, surface mulching for weed and moisture control, and the production of biofuel and compost. The decomposition of soil residues greatly increases organic carbon and other nutrients in the soil. This collected review literature addressed the potential for residues and possible options for the efficient management of crop residues in the rice wheat cropping system to improve crop water productivity and soil health.