Indian agriculture is primarily a small farm sector where more than three-fourths of the country's farm households have an operational holding less than two hectares. The study explores the scope for increasing income on these small farms by following the crop-enterprise mix on the basis of experience of the National Demonstration Project of the ICAR. The study also examines if the small and marginal farms can be made economically sustainable by implementing an optimal farm plan consistent with the availability of resources on these farms. The authors have raised a number of issues related to the small and marginal farms which need to be addressed urgently. Since small farms are a permanent feature of Indian agriculture and can not be done away with, the study points some suggestions for improving their economy. Furthermore, these small farms assume a greater significance and importance in the wake of liberalization of Indian economy.