The issue of Rural Industrialisation (RI) or more generally the growth of Rural Non-Farm Employment (NFE), is regarded as a critical component of rural transformation in less developed economies, given the failure of the industrialisation-led development strategies of the fifties. It emphasises the need to re-examine the role of agriculture and small-scale enterprises (SSEs) in long-term economic development. The rural sector should be regarded as having considerable flexibility to generate employment and incomes rather than as one "passively" supplying labour to an urban based industrial sector. This study is based on such a premise for a state which is unique in many respects given its broad-based process of growth and the absence of sharp rural-urban differentials. The author focusses on the role of rural linkages in sustaining the process of RI and argues that an excessive concentration on agriculture induced linkages has resulted in the underestimation of rural linkages. The fast growing rural services sector offers a vast potential for growth of rural SSEs via its demand for intermediate goods. At the same time the relative importance of agricultural linkages very often tends to be swamped out by urban related indicators of NFE. The former could play a more dominant role in generating NFE in relatively isolated rural areas. Insofar as the process of RI has to go beyond the narrow set of agro-based activities, a linkage which assumes importance is the local capital or entrepreneurial linkage. The goal of RI can be realised through the stimulation of local initiative, based on the real (psychic) advantage for local entrepreneurs operating in a local environment which redresses to some extent the place-specific disadvantages of rural locations.
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