The abolition of intermediaries, who are seen as a major constraint for growth of the economy in general and agriculture in particular, in the rural economy was largely successful in the first phase of policy changes. However, in the recent period, the agrarian structure has stood witness to certain significant changes, some as a response to changes in public policy like introduction of a new method of cultivation and mechanisation, while some independent of the policy changes leading to a new group of households that owns land, but do not use their labour to organise production. This paper seeks to characterise the non-cultivating households owning land and the processes that might be supporting the generation of this category of households. The paper has two objectives. To present the composition of this class/group. Were these households cultivators earlier? What is their present occupation? Have these households moved out of the village economy, but continue to have land? Are they large land owners? Two, if these households are increasing their presence in the rural economy, is the increasing importance of rural non-farm sector and tenancy as an institutional arrangement sustaining this process? Primary data from two irrigated villages has been analysed to understand the trends at the micro level and the secondary data from National Sample Survey to provide macro-level illustration of it. The Indian rural sector does show the increasing presence of a class/group of households who own land, but do not cultivate the same. A significant presence of these households is in the irrigated areas. Another observation on the scene of Indian agriculture is the decelerating growth of the irrigated States. Are the decelerating growth of irrigated States and growth-retarding institutions like the presence of non-cultivating households and tenancy related?