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The effect of soil moisture stress on growth and development of two upland rice cultivars (Brown gora, a traditional cv. and Vandana, an improved cv.) was investigated at 100, 80, 60 and 40% of water holding capacity. Results revealed that improved cv. Vandana transpired less water and exhibited higher stomatal diffusive resistance than the traditional cv. Brown gora under stressed conditions. The effects of moisture stress became more apparent during later period of stress when water was applied at 60 and 40% of water holding capacity. The reduction was 67.3 and 40.3% in dry matter accumulation and 53.4 and 54.4% in leaf area at 40% water holding capacity as compared to 100% water holding capacity in Brown gora and Vandana, respectively at 35 days after stress imposition.