Recent climatic changes and anthropogenic activities considerably affect regional water resources, particularly in water‐scarce regions. The present study, therefore, aims to understand the changes in monsoon rainfall, potential evapotranspiration (PET), surface runoff, dam storage and groundwater in the drought‐prone region of Maharashtra. The analyses of trend and step‐change were carried out using standard parametric tests. The results were verified with the application of non‐parametric statistical techniques. Notably, monsoon rainfall and runoff were observed to be declining. Exceptionally, the Yerala Basin witnessed significant increase in rainfall along with heavy rainfall events. Contradictorily, Agrani and Man Basins registered a notable decline in rainfall and runoff. As vulnerability to hydrological disasters is high, these basins should be carefully monitored. Although surface water harvesting brought a positive change in post‐monsoon groundwater level, it was the main reason for a decline in runoff volume at downstream reaches, which led to intra‐basin water disparity. The study area witnessed significant increase in groundwater extraction. Unfortunately, the misuse of government‐subsidized schemes exacerbates groundwater exploitation and stockpiling of water resources. Moreover, the increasing rate of PET augments hydrological losses and amplifies water distress. Interestingly, almost all the hydrological changes were notably experienced during the post‐2000 period. To cope with present and future water scarcity problems, it is therefore necessary to restrict irrational use and allocation of available limited water resources. The findings that emerge from this investigation may help to formulate judicious water policies and plans which could be implemented by the government, agronomists, water resource managers and farmers.