Investigations were carried out on recent developments of water resources in West Bengal – an eastern province of India with a high population density. The findings, based on a field study, literature reviews and government statistics, reveal that even a rainfall-abundant region like the present one is fast moving towards a potable water crisis due to unrestrained withdrawal of groundwater for agricultural and other purposes. This article examines the existing pattern and extent of water resources development and the factors behind such developments. The study reveals that though a lowering of the water table due to excessive pumping of groundwater has been established as one of the main causes of widespread contamination of groundwater by arsenic, effective steps have not yet been taken to control the situation. This article explores the long-term negative externalities that may result unless effective regulation is ensured. Finally, institutional weaknesses that need to be strengthened are identified, and region-specific supply and demand-side interventions are suggested to ensure protection of the critical component of the dynamic hydrological cycle.