A field experiment was conducted on rainfed alfisols, during kharif 2001 and 2002, to see the possibility of reducing cost of cultivation in groundnut cv. TMV2 through selection of proper seed size. The treatments include different categories of seed viz., assort, bold, medium, small and partially shriveled seed with test weight of 38, 42, 28, 20 and 24 g respectively. Emergence percentage at 10 DAS was significantly highest in medium, small and shriveled seed resulting in significantly high seedling vigour index in shriveled and small seed than bold seed. Abnormal seedlings observed at 10 DAS were more in bold seed (34.9%) than small and shriveled seed (10.6%). Number of leaves upto 40 DAS were significantly high in bold seed during kharif 2001 and no significant differences were observed duringkharif 2002. No difference was observed in number of pegs/plant, root length, and root density/plant at harvest with different categories of seed. Pod yield and shelling percentage was not influenced by seed size. However, haulm yield was significantly lower in small and shriveled seed during good rainfall year and no difference was observed during drought year. Good quality small and partially shriveled seed that passed through 6 mm sieve with test weight ranging form 20 – 40 g, which germinate better and require less weight of seeds per unit area could be used for sowing of groundnut under high risk rainfed condition.