Towards the end of the 1990s, the incidence of unemployment on the basis of CDS (current daily status) has exceeded seven per cent. There are also evidences of deterioration in the quality of rural employment; casualization of rural workers for instance, has increased many-fold. Real wages of rural workers however, increased and the disparity in rural and urban wages also reduced during the 90s. In this context, the present study investigates the nature and pattern of rural diversification in India. The study uses the NSS quinquennial survey on employment to present macro-trends in rural employment; it also utilizes selected information collected by Agro-Economic Research Centres (AERCs) to arrive at certain inferences about the process of rural diversification. Disaggregate level figures shows that both push-and-pull factors have contributed to rural non-farm employment growth; the process of rural diversification in such situations is however, different. The study finally discusses broad strategies to increase rural non-farm employment in the country.