Economic development of a country requires the development of rural areas so that economic sustainability could be maintained. As we know that India is predominantly rural country because its two third population or 70 % workforce is residing in rural areas. In other words we can say that rural economy constitutes 46% of national income. In spite of rising of urbanisation more than half population of India is projected to be rural by 2050. The major purpose of the present paper is to analyse the growth performance of agriculture which is considered the backbone of the Indian economy and non-farming areas that plays very important role in the economic development or rural areas. To reduce the risk from agriculture sector and to provide productive sustainability in livelihood options to rural people diversification is essential. There are two types of diversification: diversification of crop production and diversification productive activities. To identify options of sustainable livelihood in rural areas, diversification in productive activities is discussed. In non-farms areas: animal husbandry, fisheries, horticulture, cottage, and household industry etc. are included.

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Keywords: Agriculture, Agricultural Diversification, Non–Farm Areas of Production.