Conservation of rain water and checking soil erosion is central to the attainment of economic as well as financial sustainability of dryland agriculture. Integrated Watershed Development Programme is the major policy instrument for achieving this goal. The approach, though quite comprehensive, however, has come at a time when the global environmental concerns have become quite strong. In turn, this has exerted significant influence in changing the central thrust as well as the composition of watershed development programmes in India. It is the contention of this paper that the global environmental concerns have diverted attention for productivity concerns and therby resorting to some of the softer options emphasising indigenous technology, low cost measures and participatory institutional development. It is argued that external forces have deviated the policies from making substantial investments in land which farmers otherwise cannot afford to make on their own. Also, a participatory approach for project implementation, per se, may not bring desired results in terms of enhancement of productivity and livelihood security. Finally, given the options, farmers prefer yield augmenting technologies and are willing to pay for the cost. This in turn also helps bringing more effective (interactive) participation in the SWC-programme.