Consistent with the approach for an employment-centred development strategy, public employment programmes are an integral part of planning and policy in India. Apart from the advantages that accrue to the unemployed, under-employed and the poorly-employed, such programmes have a positive macroeconomic impact via increase in effective demand from the hitherto poor and vulnerable segments of the population. Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005 was notified on September 7, 2005. The Act came into force on February 2, 2006 when 200 selected districts of the country were brought under its purview (Phase I, 2006-07). MGNREGA was extended to additional 130 districts in Phase II during 2007-08. The remaining rural areas were notified with effect from April 1, 2008. The objective of the MGNREGA is to enhance the livelihood security of unorganised workers in rural areas by guaranteeing 100 days of wage employment in a financial year to a rural household whose members volunteer to do unskilled manual work. The Act further aims at creating durable assets and strengthening the livelihood resource base of the rural poor. The choice of works suggested in the Act address causes of chronic poverty like drought, deforestation, soil erosion etc. so that the process of employment generation is on a sustainable basis. This work traces the origin and development of MGNREGA and analyses its impact in rural areas in terms of Millennium Development Goals (MDGs), wage rate, financial inclusion, budgetary allocations, labour migration, governance and environmental concerns.