The nature and performance of rural economy has been changing in every country through diversification of activities on the one hand and increasing employment and income generation on the other. The farm and non-farm sectors are the two important constituents of the rural economy. Rural non-farm sector (RNNFS) in India has been gaining prominence in the rural areas over time and it is becoming more and more diversified. RNFS is regarded as the critical component of rural transformation in India, given the failure of the industrialization-led development strategies of 1950s to trickledown to the rural poor. The latter failed most obviously in their inability to absorb rural labour into the process of industrialization. RNFS includes all economic activities viz., household and non-household manufacturing, construction, handicrafts, processing, repairs, mining and quarrying, fishing, transport, trade, communication, community and personal services etc. in rural areas. Rural non-farm activities, thus, play an important role to provide supplementary employment to small and marginal farm household, reduce income inequalities and rural-urban migration.

However, absence of appropriate forward and backward linkages affect the performance of non-farm activities in rural areas. Low accessibility of market, poor infrastructure, support service weaknesses and intervention of the middlemen are impediments to the development of non-farm sector in the country.