A field experiment was conducted to quantify the resource degradation under micro-watershed management at All India Co-ordinated Research Project for Dryland. Agriculture, University of Agricultural Sciences, GKVK, Bangalore during 2000–2005. Proven technologies such as inter-terrace management practices with Vetiver (khus) and Pennisitum (Nase) grass as vegetative live bunds in combination of 0.52 sq. m cross-sectional contour bunds with open ends for in-situ moisture conservation were adopted. Micro-watersheds of about 0.6 to 0.7 hectare each having 2% land slope were delineated for constructing rain water harvesting structures like farm ponds of 180 cubic meter capacity. Different lining materials were used to control seepage loss from the stored water, which is used for providing life saving irrigation to highly remunerative vegetable crops. The highest runoff of 93.2 mm, which is 9.7% of the mean annual rainfall, occurred for the control plot (no inter-terrace management practices). The runoff produced in both the inter-terrace management practices were on par with each other (65.5 to 65.9 mm). The highest mean annual soil loss of 5.66 t/ha/year occurred under control plot and the lowest (3.151 t/ha/yr) was recorded under inter-terrace management with nase live barrier. The highest seepage loss of 8 – 10 cm per day from the stored water occurred in the unlined farm pond and the minimum seepage loss (1 – 2 cm/day) occurred in the pond lined with LOPE sheet over laid with soil + cement in the ratio of 8: 1. Incorporation of green bio-mass through horsegram (6 – 8 t/ha) enhanced the grain yield of finger millet by 8 – 10 per cent.