Damning ActionAid report warns nearly half the country's children are malnourished and calls on the west to deliver on its aid promises

The poker is glowing red hot in the flames of the burning wood. Suklal Hembrom holds a leaf against his stomach and warily eyes the older man sitting on the other side of the fire. Suddenly Thakur Das takes hold of the poker and lunges towards the boy's stomach.

Everyone in the village knows what should happen next. The child will scream loudly as the flesh begins to blister. Held down, he will writhe in agony. Again and again, the poker will jab at his belly. The more the child screams, the happier everyone will be, because the villagers of Mirgitand in India's Jharkhand state believe the only way they can "cure" the distended stomachs of their famished children is by branding them with pokers.

Das sees nothing wrong with the procedure. Nor does anyone in the village – most have scars of their own. Even though some children have died, the villagers continue because the alternative – providing enough nutritious food to sustain their children or paying for medical treatment – is simply not an option. In common with millions of others in the world's 11th largest economy, they face a daily battle to put even the most basic meal on the table.

A report out today warns that even in a fast-growing economy like India, failure to invest in agriculture and support small farms has left nearly half the country's children malnourished, with one fifth of the one billion plus population going hungry.

ActionAid, which published the report ahead of next week's summit in New York to discuss progress on the millennium development goals, says hunger is costing the world's poorest nations £290bn a year – more than 10 times the estimated amount needed to meet the goal of halving global hunger by 2015.

India now has worse rates of malnutrition than sub-Saharan Africa: 43.5% of children under five are underweight and India ranks below Sudan and Zimbabwe in the Global Hunger Index. Even without last year's disastrous monsoon and the ensuing drought and crop failures, hunger was on the increase.

The government has promised a new food security bill to provide cheap food for the poor, but progress has been slow. The reality is that a country desperate to take its place at the world's top table is unwilling to commit to feeding its own population.

Last month the country's supreme court castigated the government for allowing 67,000 tonnes of badly stored grain to rot – enough to feed 190,000 people for a month – and ordered it to distribute 17.8m tonnes in imminent danger of rotting.

India's prime minister, Manmohan Singh, protested, saying the court had crossed the line into policy-making and warning that distributing free food to the estimated 37% of the population living below the poverty line destroyed any incentives for farmers to produce. The court stood firm. It was an order, not a suggestion, the judges said.

According to ActionAid, global hunger in 2009 was at the same level as in 1990. The charity urged developed countries to make good on £14bn pledge to fight hunger, announced at last year's G8 summit in Italy.

"On the eve of the most important development summit for five years, a billion people will be going to bed hungry," said Meredith Alexander, the charity's policy head. "Despite promises to the contrary, one-sixth of humanity doesn't get enough to eat. But we grow enough food to feed every man, woman and child on the planet. The real cause of hunger isn't lack of food, it is lack of political will."

The UN Food and Agricultural Organisation announced today that the number of hungry people worldwide has dropped by 98 million to 925 million in the past year. However, Oxfam warned the decline is largely down to luck, such as two years of favourable weather patterns, rather than action from world leaders.

Abandoned to its fate

Mirgitand lies in hills about 195km east of the state capital Ranchi, at the end of a stony, vertiginous track. It is part of India, but at the same time not part of it: abandoned to its fate by the state, in the hands of Maoist Naxalite guerillas who hold the security forces at bay with apparent ease.

Das squats next to the fire, poking it with a stick. The poker lies cooling on the ground. This time he did not make contact, warned in advance that the child must not be harmed for the demonstration, though he came worryingly close.

Instead, the villagers instruct the children to show their scars. Molilal Kisku lifts his shirt. He is five, with a large, distended belly. There are dark circles on the skin from where the poker was applied. There is not a child unscarred.

Manoranjan Mahta, 44, sits on a log, watching. He works for the post office, he says: he is an educated man. Yet he submitted his son, Hemanth, to the process.

"My son had a protruding belly. We went to many doctors, but they didn't cure it," he says. "In this village when a child has a big pot belly we put a piece of banana leaf on the skin and then we put burning charcoal or a burning rod on the leaf. If the child is writhing in pain, the notion is that the germs are dying."

But it was Hemanth who succumbed. The wound became infected and he died on 21 December 2007. He was seven years old.

Struggle for survival

India may be thriving economically but it is still dogged by poverty and hunger.

A recent Oxford University report found 410 million people were living in poverty in just eight Indian states – more than in the 26 countries of sub-Saharan Africa.

Last year's Global Hunger Index placed India in the "alarming" category, ranked 65 out of 84 countries, below even North Korea.

Across the country, hundreds of millions are malnourished. A study released in May warned that 66% of children under the age of six in Delhi's slums were malnourished. The report noted that the most vulnerable sections of society were not covered under government schemes which were supposed to support them.

In Jharkhand state, a study of 20 villages carried out last year recorded 13 deaths from starvation and 1,000 families suffering from chronic hunger syndrome. It is estimated that each year, nearly 50,000 children in the state die before their first birthday. It does not help that Jharkhand's doctors are among the most poorly paid in India, earning barely half what their contemporaries in Delhi might earn. This may explain why 2,200 of the 2,468 doctors recruited by the state five years ago have moved on. The state is said to need more than 800 primary health centres, although it has just 330.

The situation in the central Indian state of Madhya Pradesh is, if anything, worse than in Jharkhand. More than half a million children below the age of five have died in the past five years and 60% of its children are categorised as malnourished. The government estimates that 37% of the population subsist on less than the official poverty line of 327 rupees (£4.57) per month in rural areas and 570 rupees in urban areas. In May, television and newspaper pictures showed 100,000 tonnes of wheat rotting in the open in the state.

And in Ganne, in Uttar Pradesh, children have resorted to eating mud. When the reports began to surface, officials apparently sent some food and told the villagers to keep quiet.