There is a rich body of literature which shows how rural households undertake multiple activities to support their livelihoods. The motives behind such diversification may vary sharply; at one extreme, households diversify their activities for maximizing income, whereas at the other extreme, they do so just to maintain their subsistence living as a coping mechanism (Agarwal 1991; Ellis 1998; Walker and Ryan 1990). Diversification in livelihood essentially has two main aspects: one is the number of different income-earning activities, which a household (or an individual) undertakes (Jodha et al. 1977); the other is the relative proportion of income gained from each activity (Ellis 2000). Most of the studies on rural diversification deal with the changes in the structure of employment and income, and the causes for the shift in employment towards non-farm occupations are analysed around growth-induced versus distress-led theoretical strands of diversification (see, Bhalla 1990; Chadha 1994; Harris 1991; Viadyanathan 1986). At the household level the process of diversification, however, is complex. A household may be involved in a number of occupations, yet in terms of their contribution to household income, just one or two may be the major contributors. Thus, to what extent will it be appropriate to term such households a case of diversified livelihoods? In order to fill this gap in the literature, this chapter examines the livelihood diversification among rural households in Uttarakhand, both in the context of number of occupations and their relative contribution to household income. It measures the intensity of diversification in livelihoods, analyses the underlying factors for determining such diversification and examines the impact of diversification in livelihoods on income levels of households in the rural areas of Uttarakhand. It also examines whether diversification in livelihoods is a risk mitigating strategy arising out of vulnerability in the nature
of assets which a household poses or a profit maximization process wherein a household switches to more secure and high-income earning livelihoods.