Industries play a crucial role in the process of economic development as they change the sectoral composition of output and employment. Diversification of rural economy, not only in terms of output, but also in terms of employment, is thus essential for the sustainability and development of the rural economy of Punjab. Considering this, the paper seeks to examine the various factors affecting non-agricultural employment. The study reveals that there is a rise in the proportion of rural non-agricultural workers within the total rural workers in the different districts of Punjab. There are wide inter-district variations in terms of population served per commercial bank and literacy rate affecting rural non-agricultural employment. During the study period, literacy rate turned out to be the most significant variable affecting inter-district variations. In rural non-agricultural employment, districts like Amritsar, Faridkot and Kapurthala have now limited capacity in the agricultural sector. Therefore, these districts should shift from the agricultural to the non-agricultural sector. As the shift of the rural workers to rural non-agricultural sector was largely due to push factors, the rural non-agricultural sector in Punjab has to develop in such a way that it can generate strong pull factors. The activities in the rural non-agricultural sector must focus on the level of per capita income of the state as well as on the aspirations of the unemployed rural, especially the educated youth. Only then, the rural non-agricultural sector, including the rural industrial sector, would be able to employ non-agricultural labor.

Though agriculture supports a large segment of the population in underdeveloped countries, there is a considerable amount of disguised unemployment in these economies. Industries play a crucial role in the process of economic development as they change the sectoral composition of output and employment. For rapid development, these economies have to industrialize their rural sectors also. Thus, rural industrialization will not only reduce the pressure on the agricultural sector, but also generate higher levels of income and increase labor productivity, which will ensure higher wages and raise the standards of living (Sutcliffe, 1971).

Punjab is a highly developed state of India. The state has shown remarkable growth after the green revolution. However, presently, its agriculture has started showing signs of saturation. Therefore, promotion of industries in rural areas, particularly in the agriculturally dominant regions, i.e., Punjab, is crucial in overcoming problems like stagnant growth, unemployment, etc. (Gill, 1980).

Agricultural Economics Journal, Economic Development, Rural Economy, Rural Non-Agricultural Sector, Capita Income, Rural Industrialization, Agricultural Sector, Green Revolution, Agrarian Economy, Non-Agricultural Workers, NAW, Rural Workers, Cropping Intensity, CI, Agricultural Growth, Non-Agricultural Employment, Rural Industries, Physical Infrastructure.