The purpose of this paper is to set out the macroeconomic and structural contexts for poverty reduction in India. It was written as background for a study, which seeks to identify how government can better support diversification out of low productivity occupations in reducing poverty and protecting against livelihood insecurity in rural India. Essentially, the paper discusses opportunities and constraints in relation to public investment and service provision that have a bearing on rural livelihoods, whether through growth or distribution mechanisms. Evidence from field studies and from other papers commissioned by the study considers how public services and investments have or have not been accessed by poor people at local level. Given the wide range of economic, social and governance dimensions of public policy that, in principle, may have some impact on the livelihoods of the rural poor, this paper has had to be selective.