<p>Groundwater depletion in India is an alarming concern that threatens agricultural sustainability, especially in the Punjab region, where groundwater extraction is at its peak compared to other agricultural states in India. The present research studies the two districts of the Malwa region in Central Punjab: Sangrur, the most depleted, and Barnala, the least depleted. This present study assesses the level of groundwater depletion, irrigation water productivity, and groundwater efficiency in these regions. The study employs an approach that combines primary data collected through multi-stage random sampling of farmers with secondary data obtained from official statistics reports to assess irrigation water productivity, crop-specific returns, and efficiency levels for wheat and paddy cultivation (A guide to DEAP version 2.1: a data envelopment analysis (computer) program Centre Efficiency. Prod Anal Univ N Engl Austr. 96:08 1–49, 1996) [<CitationRef CitationID="CR1">1</CitationRef>]. Results from the study show that water irrigation efficiency is lower when farms' gross returns are higher. This indicates that the groundwater is being exploited in these areas. On the contrary, small and semi-medium-sized farms show higher groundwater efficiency, especially for wheat cultivation. The analysis shows a persistent gap between groundwater efficiency and technological efficiency, suggesting that water resources are not used optimally. Finally, the conclusion of the study states that to resolve the issue of Punjab’s groundwater crisis, the state requires policy interventions, such as promoting the purchase of less water-intensive crops, promoting water-efficient technologies like direct-seeded rice (DSR), building reservoirs, and improving access to canal irrigation. Hence, the region of Punjab requires the use of these techniques to achieve a balance between the sustainable management of water resources and agricultural profitability in the long run.</p>