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Rural households can generate income from farm, non-farm, remittances and social support capabilities. It is observed that that policy intervention by the government to promote diversification among rural households has made only marginal changes and diversification is more of a household survival strategy. There has been an improved income for those households who have diversified and more of diversified households have come out of poverty. An inverse relationship between land holdings and diversification is observed and there is no significant difference between income earned from agricultural activity and non-agricultural activity with respect to richer households. The process of rural diversification in livelihood has to be strengthened to minimise the risk and uncertainty in the income earning capacity of rural people and smoothen the income flow so that the rural poverty can be brought down and the levels of living can be enhanced.
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