The development experience of South Asia suggests a strong link between rural development, growth and poverty reduction. Poverty in the region is a rural phenomenon. The rural poor are not only income poor; they are also deprived of basic necessities. Majority of rural population is marginalized in terms lack of access to physical and social assets, and in terms of institutions and inequality. They lack essential capabilities, have low access to productive assets and lack access to instruments to mitigate and cope with shocks that affect their well-being and ability to come out of poverty. Agriculture sector, the major source of economic growth, employment and livelihood is suffering from low agricultural productivity. In the past, in many regional economies, misguided policies and institutional weaknesses st ifled rural development and resulted in slow economic growth, increase in rural poverty, inequality and vulnerability to shocks. The most important impediment to rural development is an overly restrictive policy regime: assets distribution, institutional of credit and subsidies. Poverty in rural areas is also perpetuated because of lack of adequate infrastructure. The declining financial resources added further pressure on already weak infrastructure. The growth pattern in the region demonstrates that growth is highly dependent on agriculture sector value addition. The paper emphasizes that there is considerable scope for policy interventions aimed at harnessing development potential and improving livelihood opportunities for millions of people living in poverty and human deprivation. The last section of the paper concludes that from growth and poverty reduction perspective rural development must be given priority in the development process.