This paper attempts to model the positive role of cultivation of Genetically Modified (GM) crop with its soil-anchoring root-characteristic and use of conservation-tillage technology, in saving organic matter contents in the topsoil and reducing soil erosion. In a dynamic optimization framework the farmer produces an optimal combination of a GM and a Non-GM variety of the same crop at the steady state, though the steady state is approached most rapidly by producing a single crop. The improvement in the capacity to anchor the soil and an increase in organic matter content in top-soil will raise the long run soil stock under certain conditions. However, the policies to increase R&D investment in genetic modification and imposition of an input subsidy on GM sector will lead to an increment in area under GM cultivation though their effect on long run soil stock is uncertain.