The concept of social exclusion is context-specific and there is no uniform paradigm of exclusion across the world. This paper attempts to analyse exclusion of resource-poor groups in watershed development programmes in the Indian context. It aims to explore excluded community groups from the perspective of people’s equal opportunity and equal access to newly generated economic benefits in watershed development programmes. The paper also traces the determinant factors responsible for denial and exclusion of resource-poor groups and describes the detailed processes involved in their exclusion from institutional and livelihood opportunities in watershed programmes. At the same time, the paper also explores suggestions and views of resource-poor groups about their meaningful social inclusion in watershed programme. The Gadiwat Indo-German Watershed Development Project in Aurangabad district in the State of Maharashtra is studied in detail in terms of its social, economic and political realities through mix-method and multi-stakeholder approaches. The key findings of the paper are that landownership, caste, gender, membership in village institutions and/or watershed institutions or close relationship with members, as well as the limitations of the programme guidelines, are the major determinants of institutional inclusion and the extent of resulting economic benefits. The exclusion of resource-poor groups mainly takes the form of their exclusion from institutional representation. In order to promote meaningful social inclusion of resource-poor groups, there is need for a more livelihood-oriented focus and their equal representation and participation in watershed institutions.