The consequences of negative groundwater draft have mostly been viewed as an ecological disaster, but the externalities of groundwater depletion pose greater concern for socio-economic equity in the access to this resource. This empirical analysis signifies the concerns for the livelihoods of farmers, when the cost of depletion is disproportionately borne by the resource-poor farmers as they are unable to invest in capital and technology and are hence denied the benefits of groundwater irrigation that is subsidised by free electricity. This situation is perpetuated with further scarcity leading to unequal economic returns and, finally, takes the most exploitative form where the “large landlords” also emerge as “water lords” through surplus accumulation, forcing the small and marginal landholders to become landless agricultural labourers.