Irrigation plays an important role in the growth of India agriculture and it helped the farmers to grow multiple crops during the year. The share of groundwater in total net irrigated area (20.85 million hectares) increased by 28.67 per cent to 61.40 per cent during 1950-51 to 2010-11. Out of the total net irrigated area in the country, the share of groundwater irrigated area was 28.67 per cent and 61.40 per cent in 1950-51 and 2010-11 respectively. The growth in net area irrigated by groundwater is growing at a compound growth rate of 3.54 per cent per annum during 1950-51 to 2010-11. The total electric operated pump for pumping groundwater in the country increased from 10.27 million to 11.05 million during 2001 to 2006 whereas, the diesel operated pumps declined from 6.55 million to 6.30 million during 2001 to 2006. The electric subsidy to farm sector has increased from Rs 7334.9 crore to Rs 45561.0 crore during 1992-93 to 2011-12 registering a compound growth rate of 8.65 per cent per annum. The present study has tried to assess the impact of electricity on groundwater use and water use efficiency. The study was confined to three Indian states viz., Uttar Pradesh, Bihar and Punjab. In case of Uttar Pradesh and Bihar, diesel pump owners were using less irrigation water for all the crops as compared to electric pump owners. The diesel pump owners were getting the highest physical and economic water productivity for all the crops except paddy as compared to electric pump owners. In case of Punjab, farmers were using less groundwater for all the crops as compared to canal water. The physical water productivity was higher for all the crops grown under groundwater irrigation except bajra and barseem. The net economic value of water productivity was found higher for groundwater irrigated field in maize, bajra and wheat. The study suggests that the introduction of pro-rata pricing of electricity supply to farm sector could be the best option for better management of groundwater. This would help in equitable, efficient and sustainable use of groundwater and reduce the burden of gigantic electricity subsidy to farm sector. Pre-paid metering to farm sector may also increase water use efficiency.