This paper analyses employment in the primary and other sectors in Gujarat, one of the fastest growing states in India, by using NSS data and the results of a survey of four villages. It has been found that state level employment in the
agricultural sector has stagnated, as opposed to a secular decline at the all- India level. The survey data indicate that employment decisions at the household level are income-dependent and cannot be generalised. While ownership of non- farm assets and higher education determine diversification for the high-income households, poor households diversify due to inadequate means of agricultural production. At the policy level, active diversification into non-farm employment must be promoted, in a regionally diversified and employment-focussed manner, through initial public investment, especially in infrastructure.