Groundwater depletion has emerged as the major constraint in sustaining growth in agriculturally advanced state of Punjab. The study unravels unsustainable groundwater use in crop production using unit-level cost of cultivation survey data. The deterioration in groundwater resources is the outcome of technology and policy led shift in cropping pattern (towards paddy), irrigation source (towards groundwater) and energy source (towards electricity) in Punjab. Presently, total annual groundwater draft in the state is 72 per cent higher than the sustainable limit of 20 BCM. Agriculture being the largest user of groundwater draft bears the prime responsibility in averting groundwater crisis. Paddy emerged as the most water-guzzling crop consuming 45 to 88 per cent higher groundwater than other crops. Consequently, paddy had highest groundwater footprints (cum/kg) and lowest groundwater productivity (Rs./cum). Further, there exists large scale inefficiency in groundwater use for paddy cultivation. The optimum level of groundwater use for paddy cultivation should be about 52 per cent less than the present level of 1.2 ha-metre. Interestingly, large farmers emerged as more efficient user of groundwater resources and productive as compared to farmers with smaller land holdings. The strategy to ensure sustainability must include both groundwater supply augmentation and demand reduction measures with greater emphasis on improving water use efficiency and curtailing non-productive use of groundwater resources.