This paper examines the evolution of poverty in India through the prism of agricultural wages and employment. It links the movement in wages (and hence poverty) to the fundamental process of sectoral labour flow that underlies economic development. It finds that despite the rapid growth of the non-farm sector, its success in drawing labour from land has been limited. Yet agricultural earnings have increased, demonstrating the pivotal role of agricultural productivity. The stock of the labour force already locked into agriculture is large and the best way to improve living standards would be to boost farm productivity.