Introduction: Iron deficiency anemia is a major health problem in developing countries like India. The situation is even more grim in economically backward areas of our country like Bundelkhand region. The increasing prevalence of co-existence of iron deficiency anemia with chronic diseases makes the use of biochemical markers like serum ferritin, challenging in diagnosing cases of inflammation and functional iron deficiency. Microscopic evaluation is the “gold standard” method for assessment of iron stores. In this study, we tried to correlate the marrow iron stores with serum ferritin so as to facilitate the distinction of iron store deficiency from functional iron deficiency. Materials and Methods: We selected 143 adult patients with anemia. In all the patients diagnostic bone marrow examination was done. Serum ferritin assay, CBC and peripheral blood smear examination was also performed. Assessment of bone marrow iron was done by both Gale’s method and the intensive method and was correlated with serum ferritin. Results: The Conventional Gale’s grading revealed hypoferremic state in 46.85% cases and normal iron stores in 53.15% cases. The new Intensive method of grading, classifies anemias according to iron status. It showed that most common was combined deficiency (functional & iron stores) (43.36%), followed by normal stores, functional iron deficiency and lastly iron stores deficiency in Bundelkhand region. We also found a positive correlation of microcytic hypochromic blood picture with S.Ferritin and iron deficiency anemia (Spearman’s Rho correlation, p value=0.0001). The proposed cutoff value of S.ferritin as a surrogate marker for iron deficiency used in our study is Conclusion: The new Intensive Bone Marrow Grading Method has greatly improved iron assessment because it provides a useful iron status classification which is of high clinical importance, especially in areas with high prevalence of inflammatory conditions co-existing with iron deficiency anemia, like Bundelkhand region and remains the gold standard method. Keywords: Anemia, Ferritin, Iron, Bone marrow.