The economic development based on single sector could not be sustained and new Growth sectors must emerge for sustained growth of the economy. Rural diversification via development of allied agricultural sector, agro processing industries, manufacturing industries and other non-farm economic activities and the service sector are the key determinants for further growth. Punjab economy lags behind in agri-businesses and agro based industries and hence concerted policy efforts are needed in this direction. There is also a need for strengthening human capital formation by improving the quality of school education, higher education and health delivery system in Punjab. Developing Rural Non-Farm Activities in Punjab will provide gainful employment to every able-bodied person in rural areas which will further act as the key to poverty alleviation and general development of rural areas. The employment in the organised industrial sector is not growing fast enough partly because of the capital-intensive nature of the technology being used and partly because industrial sector has not been growing at a fast enough rate. IT empowered marketing institutions and its awareness among farmers need to be developed for strengthening Punjab agriculture. One of the most important policy option available in this scenario for mitigating the problem of unemployment and underemployment is promoting non-agricultural employment in rural areas.