An important impact parameter visualised and utilised under the watershed development programme (WDP) is its role in augmenting groundwater recharge. In hard rock areas, the life of irrigation wells and their groundwater yield is gradually declining due to many factors especially the interference of irrigation wells due to violation of isolation distance among wells, overdraft of groundwater, etc. Interference among wells is a negative externality. This study is a modest attempt to estimate the impact of WDP in reducing the cumulative interference externality by augmenting groundwater recharge for irrigation in Basavapura watershed in Gowribidanur, a drought prone area in Karnataka.