The agricultural diversification implies diversification of crop production and shifting of agricultural workforce to other allied activities such as livestock, poultry, fisheries, etc. and non-agriculture sector. The shift from the crop farming to non-farm employment is essential in order to raise income and to explore alternative avenues of sustainable livelihood.
The importance of agricultural diversification can be explained with the help of the following points:

1. A substantial portion of Indian farming is dependent on the vagaries of monsoon, making it a risky affair to rely upon solely. Accordingly, the need for diversification is required to enable the farmers to earn from other alternative non-farm occupations. This lessens excess burden on agriculture by reducing disguised unemployment.
2. The kharif season opens up ample opportunities for agricultural employment. However, owing to lack of irrigation facilities, the farmers fail to get gainful employment opportunities during the Rabi season. Therefore, the need of diversification arises during the Rabiseason.
3. Agriculture being over crowded cannot further generate employment opportunities. Therefore, the prospects of the non-farm sectors should be opened up in the rural areas to provide job opportunities, thereby, diverting workforce from the already crowded agricultural sector.
4. The non farm sector has several segments that possess dynamic linkages. Such linkages enhance the healthy growth of an economy.