The rural occupational structure of the Indian economy is witnessing a change in between 2003 and 2013. Unlike the ‘traditional’ transition process wherein households moved from the farm sector to the non-farm sector, the Indian case does not present a unique trend in this direction but has multiple movements within the rural economy. Focusing on the two different methods of occupational classification, the present article is an attempt to explain the patterns of diversification of the rural Indian economy. The questions raised here are: Is the share of households in farm sector reducing, if yes, who is diversifying from the farm sector (cultivator or agricultural labour), which occupational groups are increasing their share. The present study uses the National Sample Survey’ (NSS) unit level data on Household Debt and Investment and identifies three different important partial movements in the rural Indian economy. One is the significant decline in the share of ‘other’ households in the non-farm sector. These households might be the households with surplus who have moved out of rural sector to the urban sector. The second movement is the decline in the share of agricultural labour households and a movement towards increasing share of cultivators/self-employed in agriculture (a movement within farm sector) on the one hand and the growth of ‘other labour’ ( a movement towards pure non-farm sector) on the other hand. The third movement, if mixed households represent plural households, is an increase in the mixed households in ‘other labour’ category within this group. Maybe this is also a distress driven strategy of marginal farmers to self-cultivate their land as well as sell their labour to households in the non-farm sector. If the above trends are a relative approximation of the process in the real world, there is a need to think the agrarian reforms issue from the side of distress driven segments in the economy.