Agriculture promotes economic change and development in India through its causal links with factor and product markets. It employs about half of the work force but contributes to only about 15 per cent of the gross domestic product (GDP). In the economically weaker states, however, its contribution to state domestic product and to employment is much higher. Relatively low productivity in agriculture led to a concentration of the poor in this sector. Agricultural productivity improvement contributes to growth and provides, thereby, a route for poverty reduction. Theoretically, it is possible to reduce poverty as well as expand domestic market for industry by raising labour productivity in agriculture and spreading its gains among the low-income groups. Stabilising farmers’ income through risk management would reduce transient poverty as well.