Over exploitation of groundwater water resources is causing progressive decline in water table in the arid and semi arid parts of India. The socio-economic impacts of these phenomena range from increased cost of well irrigation to reduced returns from irrigated agriculture, to growing inequity in access to groundwater depending on the aquifer conditions and the overall socio-economic conditions of the communities. In hard rock areas, over exploitation is leading to decline in yield and drying up of open wells. This forces farmers to go for either well deepening or drilling new bore wells. But due to the poor success in hitting water through bore well drilling in hard rock areas and the consequent increase in costs of setting up a bore-well based irrigation scheme, small cultivators are the worse affected. This paper focus on the phenomenon of well failure in the hard rock areas of Dewas in Madhya Pradesh. It highlights the causes of well failure and related welfare impacts on the cultivators especially small landowners. The major impacts were found to be on the cropping pattern, extent of well irrigation, crop yields, net returns and food security in the surveyed region. In addition, discussion is centered on power subsidies in the state which have promoted indiscriminate use and further depletion of groundwater from the already low yielding aquifers.