Watershed development has been an important strategy to raise agricultural productivity. An important intervention of the Ministry of Rural Development in association with state governments is the Drought Prone Areas Programme (DPAP). The study was conducted in Karnataka which is the third highest state in the country in the proportion of dry land area. The outcomes in terms of crop productivity, livestock assets and migration have been poor during the post-project year largely due to poor rainfall since the implementation of the project. This lends support to the Meta-analysis study by Joshi et al (2005) that watershed programmes have performed well in areas with rainfall in the range of 700-1000 mm. Since the rainfall has been less than 700 mm in the study villages it is not surprising that the outcomes have been less than what one would expect. Due to climate change, rainfall is predicted to became more erratic and dry regions are expected to became drier. Extreme and intense droughts are expected at higher frequencies in coming years. The development of the rainfed areas only by relying on monsoons would not be the right strategy in the coming decades and the policy implications are outlined.