Out of about 1.2 billion people in India, 68% people live on agriculture as their main occupation. Ground water is therefore an important resource which provides over 70% of rural drinking water supply and about 50% of water used for irrigation. Rains in Monsoon season from June to September, provide the main source of water but they last only for four months and the rest of the year is dry in most of the hard rock region. About 67% of India is occupied by hard rock terrain and about 30% of the hard rock area falls within semi-arid, drought-prone zone receiving less than 500 mm rainfall per year. In semi-arid, hard rock terrain in India and in many other low-income countries, the surface water resources are scarce and polluted. Ground water occurs in this area in the shallow weathered zone up to about 15 meters depth and in the deeper fractures and fissures up to about 100 m depth. Bore wells reaching up to 60 to 100 meters depth, installed with hand-pumps, are very common for providing safe drinking water supply to villages. This causes a positive improvement in the health of villagers and an economic advantage by reducing the number of working days lost due to illness. Agricultural production in these semi-arid areas is just marginal because the rain-fed crops suffer from the vagaries of Monsoon rains. The average farm-size per family of 5 persons is about 2 Ha. There are 3 to 5 drought years within a span of 10 years, which leave the dry-land farmer in perpetual poverty. In the past 3 years, over 4,200 farmers have committed suicide due to continued crop failures. Ground water, therefore, forms a very important and reliable resource which, if available in a farmers plot of land and if utilized prudently for irrigation by digging or drilling a well, could transform the farmers lifestyle. Even if the farmers are able to save one rainy season (Monsoon) crop through protective irrigation from dug well, and if possible take winter and summer crops on small plots, they would stabilize in the rural scenario. Otherwise, the farmers would migrate to nearby cities and stay in slums. Many cities in India and other low-income countries are suffering from an ever-increasing flux of rural population thereby chocking and polluting the urban environment and putting stress on urban infrastructure. Ground water development for irrigation is the lifeline for rural economy. However, in many watersheds in semi-arid, hard rock areas, the pumping of ground water is increasing and in some watersheds it is more than the recharge available from rainfall. In these over-exploited watersheds, the yields from the wells are not sustainable. Still, farmers in hard-rock area of peninsular India are taking all risks to develop ground water for irrigational and domestic supply because of the economics underlying its use. This paper discusses the economics of ground water use and gives guidelines for sustainable development, such as availability of soft loans to farmers, insurance for failed wells and peoples participation in augmentation of recharge to ground water. Some of these guidelines have been included on the website www.igcp-grownet.org of UNESCO-IUGS-IGCP Project GROWNET, (Ground Water Network for Best Practices in Ground Water Management in Low-Income Countries) for which the Author of this paper is the Project Leader. Reverse migration from cities to villages is possible only if sustainable ground water development is done in these semi-arid areas, through watershed protection and recharge augmentation activities, as advocated by the GROWNET project.