The labour employment in agriculture fell substantially from about 55 per cent to 39 per cent over the decade (1991-2001), implying that the labour absorption capacity of agriculture sector had saturated and employment elasticity of Punjab agriculture had become almost zero. The service sector was already overgrown and the efforts of downsizing the labour force in almost all the organizations had been on. The organized industrial sector alone cannot be expected to absorb all the additional labour force. Therefore, strengthening the rural non-farm sector in Punjab is not only important rather a pressing urgency in view of the ever increasing unemployment and high proportion of the rural population and work force. The study was conducted with specific objectives i.e. to study the pattern of rural non-farm employment diversification at the household level for household or own account enterprises and the establishments, to estimate the determinants of employment in the selected non-farm rural activities, to assess region specific constraints in the growth of the livestock based agro-processing activities (meat units) and to draw the policy implications. Two districts were selected according to the concentration of rural non-farm, workers i.e. Ludhiana having highest concentration and Bathinda with lower concentration of rural non-farm workers. Sample of 120 households spreading over four village clusters in two districts of the state was ultimately selected for the detailed analysis. A sample of 15 meat-processing units was taken for the study. Reliable response was obtained from 12 units (8 DME and 4 factory). The sectoral composition of the state economy highlighted that the contribution of secondary sector to the NSDP was the least i.e. just about 22 per cent. This calls for gearing up the process of industrial development in the state. The future of the state lies in the promotion of this sector by rejuvenating and strengthening base of manufacturing especially the small and medium enterprises and more particularly by harnessing the synergies agriculture and industry through the development of agro-based industry. The comparative view of the districts brought out that in Ludhiana, only about 20 per cent main workers were involved in agriculture sector and 76 percent were found in the industrial category of other workers, whereas in Bathinda district the corresponding figures were found as about 55 and 43 per cent indicating Ludhiana as an industrially developed district and Bathinda as an agrarian district of the state. The major industrial categories identified in these clusters were traders, shopkeepers and services. The major industrial category providing employment opportunities to casual labourers were trade, manufacturing and processing etc. The major sources of employment of sample households were found as manufacturing, processing, services and repair and retail traders in the selected village clusters of both the districts. The overall male-female ratio in all the sample households was found as 93.07. The maximum average monthly income of salary class workers was found Rs. 5280 in regular employment in non-agriculture and minimum of Rs. 1500 in agriculture labour. The maximum wage given to male casual laborer was Rs. 115 in the private construction followed by Rs. 97 in services, Rs. 80 in manufacturing, Rs. 77 in agriculture labour and Rs. 56 in non-agriculture wage laborer. On the whole, the casual labourers were found employed in the category of manufacturing, private construction, transport and other activities and their extent was 85, 76, 90 and 66 per cent respectively. The present status of manufacturing enterprises in the state showed that 1.31 per cent enterprises existed in rural and 3.21 per cent in urban areas of Punjab state. Punjab’s contribution to the total India’s gross value added by OAME and NDME taken together has been estimated as about 2 per cent. Regarding the employment distribution in these enterprises, Punjab employed 9.82 and 7.87 per cent of total such workers in rural and urban areas. The value added as proportion of output was found more in OAME as compared to NDME both in India as well as in Punjab. In case of rural Punjab, these structural ratios for OAME and NDME were found more in OAME as compared to NDME both in India as well as in Punjab. In case of rural Punjab, these structural ratios for OAME and NDME were found as 0.61 and 0.48 as against 0.52 and 0.44 per cent respectively in rural India. The major enterprises were repair services, leather and leather products, cotton textiles and food products, constituting about 23, 14, 14 and 13 per cent of the total enterprises existed in the state. The major industrial divisions involving relatively more female workers were identified as textile products, food products, leather and leather products and jute and other fiber textiles. The lower/less lucrative output-input ratio and less value addition especially in urban areas of Punjab calls for the need to further strengthen the industrial infrastructure base in order to improve these ratios and hence the profitability of enterprises in Punjab. Livestock sector had been very important next to crop production in Punjab agriculture. The major meat item processed by these units was chicken, a very commonly consumed meat item in the state, followed by pork/mutton/fish. All the meat processing units depended on hired labour in a big way. The comparative analysis of profitability in DME and factories brought out that the factories enjoyed economics of scale. On the whole, it was found that the processed chicken item promised maximum profit per kg followed by fish, pork and mutton in all the livestock (meat) processing units (both DME as well as factories) in the state. An efficient marketing system was prevalent both for buying the raw material and for selling the produce. The Government intervention except registration and license fee was not prevalent but at the same time, no Govt. support was available to these meat-processing units.