Is role of agriculture in rural diversification decreasing?

Rural diversification, in the sense of increase of employment in the rural non-farm sector, has been increasing. Regression analysis to find the determinants of rural diversification has shown that the infrastructure index is the most important determinant, followed by population density; both of these variables are significant at one per cent level. These variables represent development and distress-induced rural diversification in the country. The study with the secondary information at the levels of district has suggested that growth in income-infusing activities as that of agriculture, manufacturing, tourism, etc. encourage development-induced diversification; while dearth of such activities leads to distress-induced diversification in the country. It is interesting to note that agriculture does not play an important role in rural diversification, though the earlier studies have glorified role of agriculture in rural diversification. The issue of agriculture and rural diversification has further been probed by regressing agricultural performance as measured by agriculture income (Rs per hectare of cultivable land) on rural non-farm employment (per cent of rural nonfarm employment in total employment) in selected states of the country for the year 1983, 1993–94 and 1999–00. The results suggest that the effect of agricultural income on rural non-farm employment has decreased during the reference period. The study has reasoned out this decreasing influence of agriculture on rural diversification.