Diversification and Livelihood Options: A Study of Two Villages in Andhra Pradesh, India 1975–2001U KDebauthorG DNageswara RaoauthorY MRaoauthorRSlaterauthorThe diversification of rural livelihoods is the subject of a growing amount of conceptual and policybased research. This paper reports on the findings from a re-survey and longitudinal panel survey carried out in the villages of Aurepalle and Dokur in Mahbubnagar District in Andhra Pradesh, India. This is a particularly valuable data source since these villages have been surveyed at intervals by ICRISAT since 1975 and have enabled an analysis of changing rural livelihoods over time. Agriculture remains the most important source of livelihood in both villages, though the relative importance of crop cultivation has decreased, as has real income from crops. Agriculture has become an increasingly risky pursuit and households have sought other sources of income, most notably through migration for agricultural labour in other villages or for wage labour in urban areas such as Hyderabad. Whilst there are a small number of cases where diversification has enabled households to lift themselves significantly above the poverty line, the overwhelming experience of diversification is as a coping strategy. Mahbubnagar District experienced drought in 1997–8 and between 1999 and 2001. The intervening years were characterised by only average rainfall. It remains to be seen, therefore, whether the diversification into non-farm activities is a short-term response to adverse agricultural terms of trade and ecological uncertainty brought about as a result of extended drought or whether diversification represents a long-term move away from agricultural livelihoods in rural areas that will be sustained. The prospects for a return to agriculture in the future will be diminished if population density continues to rise and limited by the gradual erosion of agricultural assets, such as land and large livestock like cattle and buffalo. The findings from this re-survey of two villages raise important policy challenges for government and other stakeholders in Mahbubnagar District, in Andhra Pradesh and in the semi-arid tropics of India more generally. Whilst government policy and state interventions are made along sectoral lines, household livelihoods are highly diverse. Policy-makers need to reflect on the most suitable ways of supporting this diversity, for example by facilitating access to the assets that people draw on to diversify or by ensuring that agriculture is less risky and agricultural assets are not eroded during periods of uncertainty. Only with more appropriate policies that recognise the importance of diversity will it be possible for more people to make positive exits from poverty through diversification.Agriculture-Farming, Production, Technology, Economics2002Overseas Development InstituteMonograph