This paper has used unit level data available from the 70th Round of NSSO survey on Situation Assessment of Agricultural Households to study the impact of agricultural training and extension services on three important dimensions of small holder farming, viz., commercialisation of staples, viz., rice and wheat, crop diversification and employment choice. A Household Commercialisation Index is constructed to determine the intensity of household participation in the output market by small holders. Using a twostep Heckman Selection model, the research shows that training and extension services have a key role in motivating small holder farmers in participating in the output market; however, these factors did not have any significant impact on determining the intensity of commercialisation. Training and extension services have also been found effective in promoting crop diversification among small holder households. Besides bringing out the role of skilling in securing integration of small holders in the output market of rice and wheat and in promoting crop diversification, the study also sheds light on the other determinants of small holder commercialisation and diversification. The Treatment Effect Models show that both commercialisation and diversification have beneficial effects on small holder welfare as they serve to increase the monthly per capita expenditure of these households. Further, using a Heckman Probit Model to control for selectivity in participation in labour market, the study finds that agricultural skilling reduces the probability of a worker belonging to small holder household in engaging in casual daily wage based employment and in unpaid family labour in agriculture; on the other hand the probability of engagement in self-employment activities in agriculture is enhanced by exposure to agricultural training programmes. The findings of the study underscore the need for massive expansion in agricultural skill development and extension services for enabling small holder farmers in India to emerge from the shackles of subsistence farming and in generating sustainable agricultural livelihoods.