Investigations to study the production potential and economic feasiblity of alternate crops and cropping systems in low rainfall hill zone of Karnataka were carried out at Agricultural Research Station, Mundgod during 1994-95 and 1995-96.  The rainfall during the cropping season was 68.5 percent higher in 1994-95 and 7 percent lower in 1995-96 compared to the normal rainfall of ten years. Pooled results indicated that yield of rice (3322.65kg/ha) Was on par with the yields of cotton, (3080.55kg/ha) maize (3635.15kg/ha), soybean, (2484.5kg/ha), turmeric (2705.35kg/ha), ragi (2959.05kg/ha) and redgram (3972.75kg/ha), but significantly lower than other crops and intercropping systems tested. The highest yield was recored with cotton+soybean (5001.45kg/ha) which is on par with cotton+rice (7729.5kg/ha). Cotton+rice and cotton+soybean intercropping systems recorded almost three times net returns as campared to sole rice.  The practice of intercropping aims at insurance against total crop failure under aberrent weather conditions,increases total productivity per unit area and Judicious utilization of land resources and other farming inputs including labour.