The present study aims at 1) estimating the magnitude of urban-rural per capital income differentials in Indian economy, 2) measuring the extent of inter-state variations in the urban-rural per capita income differential, 3) analyzing the contribution of the structural factors to the urban-rural differential and 4) analyzing the overall sensitivity of urban-rural income differential to sectoral productivity differentials. The study relates to the year 1970-71 and presents the estimates of urban and rural per capita incomes for the 15 major states of India whose population exceeded one per cent of the total population of the country in the census year 1971. The main findings of the study are: 1. The magnitude of urban-rural per capita income differential in India is of the order of around 2.4 to 2.5. 2. There exist considerable inter-state variations in the rural-urban per capital income differential, the ratio ranging all the way from 1.33 to 3.97. Rural per capita income shows a greater regional variation than urban per capita income. 3. The structural factors contribute marginally more to the urban-rural income differentials than the sectoral productivity differentials. 4. Within the sectoral productivity differentials the productivity differentials in the tertiary sector contribute more to the urban-rural income differential as compared those in the secondary sectors.