E-governance has become the key to good-governance in a developing country like India. To be at par with developed countries, the Government of India had made out a plan to use Information Technology extensively in its operation to make more efficient and effective and also to bring transparency and accountability. However, for successful implementation of E-Governance, government officials have to realize that E-Governance is no longer a matter of choice, but an absolute need of the day. Cooperation from government officials and staff will be crucial in realizing the goals of modernizing this nation through E-Governance. While the developed countries have been able to benefit greatly from the wide use of Information Technology, many developing countries are still grasping to make sense of how IT fits into their problems. The trend is true in the case of E-Governance also. In every developing country, E-Governance has been talked about a lot; some government offices have even taken innovative steps towards certain E-Government projects. Since this is a new concept for government officials who are used to familiar methods of work, the growth of E-Governance is met with resistance and fear, among other infrastructural problems. This paper deals with the problems and challenges of E-Governance, reasons of E-Government Project Failures, current status of E-Governance related initiatives in India and future prospects of E-Governance in India.