The National Rural Employment Guarantee Act came into effect in September 2005. It provides for 100 days of guaranteed employment in one financial year to all rural households members who are willing to do manual labour. The study covers a sample of 320 beneficiaries spreading over eight grampanchayats in three revenue mandals of Kurnool district. The debt on cultivation was Rs.5001 – 10000, above Rs.5000 for festivals, Rs. 1001-2000 on children’s education and Rs. 1001-1500 for medical treatment before joining in MGNREGS. After joining the MGNREGS, the debt was above Rs.5000 on cultivation, above Rs.4000 on festivals, less than Rs.2000 on children’s education and Rs.5001- 1000 for medical treatment. The decrease in debt is significant at 1 per cent level on all aspects and concluded that the MGNREGS has lot of impact on the beneficiaries in reducing the debt position after joining. It is very useful to the unemployed and rural poor.