“There is a water crisis today. But the crisis is not about having too little water to satisfy our needs. It is a crisis of managing water badly – such that billions of people and the environment suffer.” (World Water Vision 2000).The management of water resources is becoming increasingly challenging in India with accelerating growth and development. Scarcities are becoming frequent and managing the distribution across vast areas of the country, and amongst millions of users, in a way that is sustainable, is becoming a major problem. Irrigation is crucial for agriculture and rural incomes in India. The technical solutions to the difficulties are typically known and are often implemented, but the institutional issues of control, organization and management within the political economy of democracy and small farm agriculture are becoming exceedingly difficult and pose the most serious challenge. This paper presents some preliminary results of recent field-based research supported by ACIAR which examines institutional issues in water resource management in India’s agriculture. Among different approaches, it focuses on the new institutional economics framework for studying the subject. The effort is to draw lessons and suggest an effective institutional framework for improving water resource management institutions in India. The paper is based on primary data collected from a variety of settings in the states of Andhra Pradesh, Gujarat and Maharashtra.