The acute spatial and temporal variations in precipitation patterns have greatly influenced water resources planning, management, and development in India. Specifically, these patterns have led to the development of several water transfer projects in the country. The Inter-Linking of Rivers (ILR) project is a grand example of such a water transfer project. In this paper, we will discuss major justifications and challenges to the implementation of the ILR project and discuss potential alternative policy recommendations for water resources management and planning in India.