Rural development has a significant impact on the economic growth of the country. The rural economy comprises 71% of the total population of India. Agriculture and allied activities are the main sources of income and this primary sector which contributes almost 25% of India's GDP. India is at that stage of its development where bold policy decisions have the potential to accelerate its economy and thus lead hundreds of millions out of poverty and into prosperity. After a long time rural development has assumed global attention especially among the developing nations. A country like India where verily 70% of the people live in rural areas has great significance. Rural development as an integrated concept of growth and development has been of paramount concern in India. The role the government has to play ahead for rural development is to ameliorate the standard of living of the rural people. This present paper attempts to review critically the current rural conditions of India, and study the problems and prospects of the villages with a special reference to the vast rural population. Despite diversification, agriculture remains an essential source of income, directly and indirectly. Measures for rural development cannot be effective without significant capacity building and institutional support.