This micro level study of a district in the drought prone Rayalaseema region provides an indepth analysis of incidence of poverty of rural labourers where the rural employment, wages and income of the labourers depend significantly on rainfall and availability of groundwater on which agricultural growth of this region depends.The incidence of poverty among the rural labour households was assessed using head count method on the basis of income, expenditure and calorie intake of food. To measure the severity of poverty, Sen's poverty measure has been computed on the basis of income, expenditure and calorie intake of food. In addition to the above, human poverty index has been estimated which facilitates to understand the factors depriving the rural labourers to have a decent and appropriate standard of living. All the concepts used in the study have been defined.