India's agricultural output, economy, and societal well-being are strappingly dependent on the stability of summer monsoon rainfall, its variability and extremes. Spatial aggregate of intensity and frequency of extreme rainfall events over Central India are significantly increasing, while at local scale they are spatially non-uniform with increasing spatial variability. The reasons behind such increase in spatial variability of extremes are poorly understood and the trends in mean monsoon rainfall have been greatly overlooked. Here, by using multi-decadal gridded daily rainfall data over entire India, we show that the trend in spatial variability of mean monsoon rainfall is decreasing as exactly opposite to that of extremes. The spatial variability of extremes is attributed to the spatial variability of the convective rainfall component. Contrarily, the decrease in spatial variability of the mean rainfall over India poses a pertinent research question on the applicability of large scale inter-basin water transfer by river inter-linking to address the spatial variability of available water in India. We found a significant decrease in the monsoon rainfall over major water surplus river basins in India. Hydrological simulations using a Variable Infiltration Capacity (VIC) model also revealed that the water yield in surplus river basins is decreasing but it is increasing in deficit basins. These findings contradict the traditional notion of dry areas becoming drier and wet areas becoming wetter in response to climate change in India. This result also calls for a re-evaluation of planning for river inter-linking to supply water from surplus to deficit river basins.