The study has assessed the economics and sustainability of SRI (system of rice intensification) and traditional methods of paddy cultivation in North Coastal Zone of Andhra Pradesh for the period 2008-09, based on the data of costs and returns of crop. Apart from budgeting techniques, benefit-cost ratio (BCR), yield gap analysis, sustainability index and response priority index have been employed in the study. It has shown that BCR is higher for SRI (1.76) than traditional (1.25) methods. Further, there is a 31 per cent yield gap between SRI and traditional methods, in which cultural practices (20.15%) have shown a stronger effect than input use (10.85%). The most important constraint in SRI cultivation has been identified as ‘nursery management’. The SRI method being more skill oriented, the study has observed that yields can be made sustainable if constraints are addressed on war-footing basis.