1) Agricultural diversification involves reallocating farm resources like land, capital and equipment to non-farm activities or alternative crops. It helps reduce risk and respond to changing demands, policies and climate change.
2) There are two approaches to crop diversification - horizontal which adds new high-value crops, and vertical which adds value through processing.
3) Diversification is needed in India due to monsoon reliance, lack of irrigation, and to provide employment outside of agriculture. Government policies aim to promote diversification through insurance, technology missions, subsidies and other support.