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The water resources management has of late become a very challenging task due to manifold challenges of multi-sectoral demands, decreasing availability coupled with the looming threats of climate change. The Bundelkhand region in central India is primarily dependent on rain-fed agriculture. In this semi-arid region, drought is becoming frequent, and there is an increasing pressure on scarce resources such as farm land, water and pastures. The growing water demand across competitive sectors, increasing severity of droughts, declining groundwater levels, and deteriorating water quality are some of the crucial problems faced by the stakeholders in the water sector of this region. Effective solutions to the water problems must tackle both the supply and demand, identify user's actual needs and proceed with appropriate technologies. Integrated Water Resources Management (IWRM) approach is considered to be particularly useful for the water resources management in such semi-arid regions of India. Estimation of the available water supplies and the demands is the first and foremost task in developing management strategies for water-scarce regions. This paper presents the results of a detailed water balance study carried out for Ur River watershed in Tikamgarh district of Madhya Pradesh (India) by quantifying the important hydrological components during 1999-00 to 2010-11. The spatial information pertaining to the topography, land use and soil type have been extracted using the ArcGIS 9.3 and crop water requirements computed by CROPWAT 8.0. It is observed that surface runoff of 301, 206 and 333 MCM was generated during the wet years 1999-00, 2003-04 and 2008-09 for an annual rainfall of 1212, 1035 and 1196 MCM, respectively. The water budget helps to understand the overall water availability and demand scenario, particularly during periods of droughts, so that effective water resources management schemes can be devised.