India is facing a severe water shortage due to an incorrect incentive structure for agricultural water use, which accounts for 89% of total groundwater usage. This is largely due to government policies that promote the cultivation of water-intensive crops like paddy, wheat, and sugarcane, leading to depleting groundwater reserves and a decrease in the availability of pulses and oilseeds. Despite efforts to promote crop diversification towards less water-intensive crops, the profitability of these crops is unpredictable due to market price fluctuations and unstable yields. The article suggests that stable price policies, technology development for alternative crops, expanded controlled irrigation, and improved market infrastructure could encourage farmers to diversify their crops and conserve water. The author also emphasizes the potential for increasing crop diversity in high rainfall areas by promoting rainwater harvesting and improving market infrastructure for perishable horticultural crops.