This micro level study, conducted in the state of Chhattisgarh to examine the income and employment pattern, has revealed that farm and non-farm activities are the main sources of income and employment and off-farm activity (agricultural labour) contributes only a negligible portion. The smallholders as well as landless households during the slack agricultural season depend on rural non-farm activities as the source of earning. A wide disparity in economy of farm and non-farm households has been observed. The income has been found higher under farm than non-farm households, but on per capita basis, no significant difference has been observed between farm and non-farm households. Within farm households, there are wide disparities between marginal and large farmers. A major portion of farm household’s income is generated from kharif crops and a small portion by rabi crops due to prevalence of mono-cropped farming system in the state. A majority of households has been found to generate their employment through non-farm activities. The annual employment generated by non-farm household is considerably higher as compared to that by farm households. Within farm households, employment provided by service activities has shown a positive relationship with farm-size, while there is inverse relationship with non-agricultural labour. Policies aimed at improving the income and employment level include diversification of agriculture and increasing of crop productivity. To promote the rural non-farm sector, financial assistance may be provided to start new nonfarm activities.