A large amount of money is spent by developing countries in designing and implementing poverty alleviation and reduction programmes. Many of these programmes have well defined objectives and sub-objectives – but the achievements are quite often uncertain. Most of the studies conducted to investigate the effectiveness of these programmes emphasize structural bottlenecks, asymmetric information, and rent seeking behaviour as hurdles preventing these programmes from reaching comprehensive benefits to their target households. This paper moves the investigation one step further and probes whether effective governance or its absence has any effect on the effectiveness of the poverty reduction programmes. The paper thus provides an analytical characterization of beneficiary households from both troubled and non-troubled Indian states and studies factors that were important in the beneficiaries realizing income benefits from the SITRA programme of the government of India.