This paper has analysed the recent trends in growth of agriculture, income and employment in India. Although agricultural growth recorded was 3 per cent per annum during 2005-06 to 2010-11, few states like Kerala continue to witness low growth. Although small farmers have benefitted from this growth, their income levels are still very low. In general, the income of rural households has increased by 24.97 per cent during the period 2004-05 to 2009-10, and the increase has been the highest for agricultural labours (31.97%), followed by self-employed in agriculture (25.12%) and self-employed in non-agricultural sector (21.80%). Across farm-size, the non-farm sector has played a major role in raising rural income and reducing income disparity across the states. The study has reported a shift from the households selfemployed in agriculture and agricultural labours towards self-employed in non-agricultural sector and other labour-jobs, which has accentuated labour scarcity in the rural areas. The study has suggested that appropriate policies should be evolved to promote skill development and generate employment opportunities in the non-farm sector in the rural areas in order to increase livelihood, food and nutritional security, reduce the regional disparity and alleviate rural poverty in the country.