Police said the entire incident turned out to be a concocted story of her family members who wanted to "teach their neighbours a lesson" by falsely accusing them of the elderly woman's murder.
Jagudi was found alive in another village while the bones recovered in her house were found to be that of an animal, they said.
"Jagudi's son Bhera Meena had alleged that his house was set ablaze by his neighbour Maana Meena on Sunday last in which his mother died," they said.
Investigation also revealed that it was Bhera who set ablaze his own house to mislead people, the police said, adding that the accused would be arrested for misleading the police.