Dryland based livelihood and environmental opportunities in India represent 16% of global population living on 2.5% of land, 2 forests and 4.7% of world's water resources is a larger concern of an equitable development process. Although significant progress has been witnessed in the knowledge based component of the economy, poverty among unskilled workers is prevalent especially among the 70% rural population. Sustainable management of rainwater and investment of social capital at the scale of a geo-hydrologically defined natural unit of a watershed was expected to improve income and employment. Participatory process of creating alternative institutions and empowerment of communities aimed at self propelled decentralized development by ridge to valley system of treatments of the entire area. Seven watersheds representing diverse agro-ecological and socio-economic conditions were evaluated by analyzing five years multi-criteria data. The average size of a watershed was 580 ha with an average occupation of 72% in agriculture and 23% as landless labourers. In situ soil and rainwater conservation and harvesting, bio-physical measures, improved farming practices and micro-enterprising supplemented the indigenous technical knowledge for enhancing productivity. Empowered watershed associations (WA), self help groups (SHG) and users group (UG) ensured decentralized or bottom up approach of harmonizing with the social capital for upscaling. Creation of an average 396 ha-cm surface water storage and 23% improvement in well recharge rate enhanced irrigation by 253%, productivity by 28% and farm income by 124%. Indices of crop diversification increased from 0.67 to 0.93, cultivated land utilization from 0.31 to 0.39 and crop productivity from 0.47 to 0.66. Resource conservation measures reduced risk factor and fertilization index (investment indicator) improved from 0.43 to 0.68. Benefit : cost ratio ranged from 1.17 to 1.9 with an overall average of 1.62. Area weighted average of land leveling index improved from 0.37 to 0.65 (one being ideal) and about 12% of wasteland was re-vegetated. Biological measures, conservation structures and capital investments reduced rainwater run off from 31.2 to 13.6% and soil loss from 15.9 to 4.3 t ha-1 yr-1. About 50% membership of women, 41% of socially disadvantaged persons, 26% of landless and only 24% of land owners of 62 SHGs indicated social justice and equity of the distributive development. Overall people's participation ranged from 49 to 77 with an average of 62%. Stakeholders contribution of 27% of the total investments for creating corpus fund for maintenance of the activities during post external intervention phase was more than expected. This model was internalized into the government policies and guidelines notified for almost all land based development programs of India.