The potential effects of improved sot! and water management technology on factor shares m d1yland agnculture are evaluated by usmg data from an on-farm verification expenment conducted m 1981/82 m TaddanpaUyvillage, Andhra Pradesh, India. The results show that the improved tecl111ologyoccup1es 75 and 90 percent of operated land and yields attractive rates of return of 134 and 147 percent on average large and small farms, respectively In general, the technology increases the poss1b1ltty of substitutmg labour for land, and capital for labour as well as land. A prominent rtse m the returns to management underlmes the role of extensmn and other development agencies m 1mprovmg skills and managenal capabihtles of the farmer.