This study was an effort to analyse the problems and prospects of water resource management and for suggesting strategies to meet the perceptive demand of 410 L of water per family during the winter period in South Sikkim district of Sikkim state, India. The district is of hilly terrain with an average rainfall of 1,500 mm per year, yet the district faces acute water shortage during the winter period. The hydro-geological and meteorological characteristics of the sub-watersheds were also studied. The district had very poor soil depth (<50 cm), low water holding capacity of soils (27–28%) with mostly sandy-loam texture. The sub-watersheds were found to have more than 70% first-order streams, higher bifurcation ratio (3.31), higher drainage density (3.99 km/km2) and higher stream density (8.65/km2). Sub-watersheds are mostly elongated with average form factors of 0.21. The rainfall pattern, soil type and morphometry of sub-watersheds indicated poor in situ moisture storage and limited possibility of stream water harvesting. To mitigate the scarcity of water in South Sikkim, the only option left for the planners is to promote household roof water harvesting so that water demand can be met during the average consecutive dry period of 30 days.