The rural non–farm sector is no longer viewed as a ′passive side route′ to provide employment for some, rather its centrality in the overall strategy of rural transformation is well recognized now. It is quite clear that in peasant economies, characterized by heavy demographic pressure on land, small and fragmented holdings, iniquitous land distribution structures etc., agriculture alone can not solve the problems of rural unemployment and underemployment (Chadha, 1993a). Given the low employment elasticity in the increasingly capital–intensive manufacturing sector, and problems of urban congestion, the necessity for providing employment within the rural sector itself is being increasingly realized. The rural non–farm sector is considered as the backbone of numerous parts of the rural world. It has also been regarded as the primary source of income and employment for many of the world′s poor. Evidences around the world show that rural non–farm income constitutes roughly 35 per cent of rural household income in Africa and about 50 per cent in Asia and Latin America. In the developing countries share of rural non–farm income is high and varies from 20 to 50 per cent (Islam, 1997). Similarly, rural non–farm sector holds the share of 25 to 35 per cent of total income of rural households in contrast with its 20–25 per cent share of employment (Hazell and Hagblade, 2007). In the context of Indian economy, too, the percentage share of rural nonfarm sector in households′ income has increased from 31 per cent to 51 per cent during the period 1972–73 to 2009–10. Further, rural non–farm sector exhibits various forward and backward linkages with the other sectors of economy. These inter–linkages can be observed both from supply side as well as demand side. From the supply side, agricultural sector releases some resources for being transferred to the other sectors of economy. The investible surpluses that are created in the agriculture sector but are not absorbed in it are transferred to the industrial sector (Rajiv Khosla et al., 2010). On the demand side, agricultural sector plays a pivotal role for the process of industrial development by providing the necessary demand of industrial output. An expanding and mechanized agricultural sector, which makes use of modern science and technology, creates demand for the inputs like fertilizers, tractors, harvests, combines etc., which are supplied by the industrial sector (Arvind Awasthi, 2010). Moreover, RNFS can play an immense role in reducing wide spread rural poverty through income and employment generation at the times of agricultural distress. The rural non–farm (RNF) sector can interact favourably to alleviate rural poverty with a greater likelihood of the poor households employed in this sector (Lanjouw, 1999; Lanjouw and Shariff, 2004). This role of RNFS becomes immense as it can provide diverse employment opportunities to the rural people and in the process transform the rural economy in the desired direction of inclusive growth (Planning Commission, 2010).