Rural India is undergoing a sweeping transformation. The narratives of this transformation range from exciting stories of ‘rural resurgence’ and rapidly expanding rural consumption to acute agrarian distress and large numbers of farmers committing suicide. Contemporary rural India actually is vastly complex, subject to several new forces of change, and does not fit neatly into any of these characterizations. Greater exposure raises rural aspirations for a better quality of life and arouses appetite for consumer goods. Recent data show that rural monthly per capita consumption expenditure (MPCE) grew at a rapid 5.5 per cent a year between 2009–10 and 2011–12 (NSSO 2012). While average rural MPCE remains about half of urban, the growth in rural income and expenditure is reflected in a sharp drop in rural poverty to less than 26 per cent from 34 per cent in just two years. With its growing purchasing power, the rural market is no longer a residual retail market. Products are being designed to cater specifically to rural demand. Rural India is making its presence felt. In the above backdrop, This paper made an attempt to briefly review the Contribution of India’s, Rural Economy and also examine the Dynamics of Rural transformation Further it identifies the Common Challenges faced by Rural Agriculture Economy and explore ways to face Transition Challenges along with Government initiatives. Finally argued for need for structural changes in rural economy. A descriptive and explorative methodology is followed.