India, particularly rural India, has been home to entrenched poverty for long. It is, therefore, imperative to understand people’s vulnerability to poverty. Further, since the Government of India has invested considerable human and financial resources in Gram Panchayats it is important to understand to what extent these Panchayats have been successful in redressing vulnerability, especially since we establish that ex-ante vulnerability has a significant effect on ex post poverty dynamics. We then identify the components of vulnerability to better focus policy. Finally the impact of coping strategies on household welfare is assessed. These are the broad themes of this paper.