Out of estimated 143 m.ha net cultivated land in India, 97 m.ha (68%) is rainfed which produces 41 per cent of the food grains in the country. Low and erratic rainfall, high temperature, degraded soils with low available water and multi-nutrient deficiencies are important factors contributing to low crop yields in these regions. In the recent years, decline in soil fertility, low crop productivity and unsustainability warrant the attention for improving soil health and environment. Although amount of soil organic carbon in Indian soils is relatively low (0.1 to 1.0%) its influence on soil fertility and physical health is of great significance. However, maintenance of soil organic carbon under tropical conditions particularly in arid, semi-arid and sub-humid conditions is difficult due to extremely high temperature and moisture stress. Integrated nutrient management (INM) combining locally available organic sources with chemical fertilizers is a possible option for sustaining soil productivity and soil quality. A long-term INM experiment was started at Agricultural Research Station, Anantapur (14o41'30'' N 77o40'30”E) under All India Coordinated Research Project on Dryland Agriculture in 1985 in an Alfisol with groundnut production system. Depth-wise (20 cm interval up to 1 m) soil sampling was done after kharif, 2004 (after 20 years) and water retention, soil fertility and biological parameters of soils were studied. After 20 years of cropping, fertilization and manuring, a considerable improvement in organic carbon was observed. Organic carbon ranged from 0.15 to 0.31 % under control profile to 0.18 to 0.59 % in 50% NPK (10,20,20 kg ha-1)+4 t ha-1 FYM. Under 50 % NPK+4 t ha-1 groundnut shell incorporation also, about 25 % improvement in organic carbon was observed in surface layer. Available water content was improved in the range of 2-3 % over control with organic manure addition. There was a build up of N, P, K, S, Ca, Mg, Zn, Fe, Cu, Mn and B with different INM practices over control. Improvement of soil fertility was also observed in deeper layers of the profile. Microbial biomass carbon improved substantially with groundnut shell and FYM additions over control and 100 % inorganic fertilizers. Different enzymes such as dehydrogenage and Aryl sulfatase levels also improved with INM and 100 % organic treatments. In general, 100% NPK and INM combinations have maintained higher pod yields of groundnut than 100 % organic and control plots. Results so far indicated that INM combinations of 50 % NPK plus 4 t FYM or groundnut shell improved soil health in terms fertility and biological properties and maintained higher productivity of soils.