This article aims to investigate the effects of the expansion of private wells on rural livelihood (income) in a tank-intensive watershed in the upper Gundar River Basin in southern Tamil Nadu, India, based on data obtained by recent field surveys, government statistics and meteorological records. For the entire upper river basin, we show spatial differences at the village (gram panchayat) level and track the changes over the last two decades. The major finding is that although traditional crop production, mainly composed of paddy, millets and pulses, was dominant at least until the mid-1990s, the expansion of private wells enabled farmers to introduce cash crops, especially in the upper part of the basin. By contrast, fallow land increased sharply in the lower part of the basin due mainly to the disappointing performance of the wells. The different performance of wells finally resulted in a significant income gap between the upper and the lower river basin.