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Synopsis Rural diversification, the strategy adopted since the eighth Plan as a means for employment generation and income augmentation, becomes still more important in the emerging economic context with a premium on value-addition, productivity, market-orientation, and safety net. Rural diversification, when conceived properly, forms an innate part of rural transformation and has dimensions such as crop, livestock, and occupational (employment and income) diversifications. A well designed diversification strategy can, therefore, derive considerable synergy not only from the linkages among diversification dimensions but also from those between rural diversification and economic transformation. What are these strategic linkages? How can they be exploited to effectively realise the diversification goals? Are there any trade-offs between these goals and other policy goals like food and fodder self-sufficiency, input use efficiency, and economic performance? Can such trade-offs and policy conflicts be resolved? This book is an attempt to provide answers--both theoretical and empirical--to these and related questions. The book argues that the main thrust of diversification strategy should be on the creation of a wider spectrum of employment and income options wihtin the rural sector so as to raise the opportunity cost of labour, motivate skill formation, raise the wage rates, and provide an income cushion needed for crop and livestock diversification especially among smaller farms. Since the effectiveness of this strategy depends critically on an all round growth in rural economy, the book concludes that it can neither be an exclusive policy nor be an alternative to existing policies but a critical and leading, component of an overall strategy for a faster and more broad-based rural economic transformation.