https://doi.org/10.1177/00219096221130343 Journal of Asian and African Studies 1–18 © The Author(s) 2022 Article reuse guidelines: sagepub.com/journals-permissions DOI: 10.1177/00219096221130343 journals.sagepub.com/home/jas J A A S Determinants of Livelihood Diversification of Farm Households in Rural India: Evidence From National Sample Survey Ruma Kumari and R. V. Ramana Murthy University of Hyderabad, India Abstract The lives of rural households are predominantly based on agriculture and its allied activities. However, there are signs of an agricultural crisis resulting in dependence on alternative sources of income. This paper analyzes the factors that influence the decision of farm households to participate in non-farm activities for alternative income. The official data for two years on the Situation Assessment Survey of Agricultural Households are explored and a pooled probit regression model is run to examine the determinants of income diversification. Our findings reveal that farm income and irrigated land negatively influence diversification. However, diversification of those having lower access to farm holdings, socioeconomic deprivation, and improved access to education, informal credit, and crop insurance point out positive participation in non- farm enterprises. In addition, the population belonging to hilly and coastal plain regions and the age group 30–64 years are more likely to diversify. Keywords Income diversification, farm households, rural non-farm enterprises, determinants, pooled probit model Introduction Structural transformation is an important part of the process of economic development. The kind of transition that ensued in developed countries from a traditional to a modern economy remains an elusive goal for most poor countries, like India. While some believe that such transformation is happening albeit at a slower pace, others believe that probably may not occur at all (Nayyar, 2012; Sanyal, 2007). Considering the slower transition discourse, there is lesser clarity too whether the countryside would diminish in employment toward urbanization, or it would follow an intermedi- ate stage of development/enlargement of a non-farm sector within the countryside as well. The modernization of agriculture is likely to generate considerable linkages with a local non-farm sec- tor. Given the poor urban absorption and high population growth in the rural areas, there is going Corresponding author: Ruma Kumari, University of Hyderabad, Hyderabad 500046, India. Email: ruma17seph10@gmail.com 1130343JAS 0 0 10.1177/00219096221130343Journal of Asian and African StudiesKumari and Ramana Murthy research-article 2022 Original Research Article