The rainfed areas play an important role in providing livelihood to a large segment of population. An insight into the rainfed areas of the country presents a grim picture of water scarcity, fragile ecosystems and land degradation due to soil erosion by water and wind. Since, the irrigated areas are experiencing stagnation in yield levels due to deterioration in soil health, falling water table etc, it is now essential to concentrate on rainfed areas for increasing area under cultivation and improving yield levels. This paper brings out broadly the size of the problem, policy and programmes taken up by the government, impact of such programmes, investment requirement and a possible action plan to deal with rainfed agriculture.