Theory:

     “No need to stare stupidly. What’s your name?”

     “Velu,” muttered Velu, looking away.
 
     “So Mr. Velu,” said the girl, looking at his bundle. “Run away from home?”

     Velu didn’t answer. He didn’t want to tell some strange girl what he had done. He had run away because he couldn’t stand his father beating him for one more day. His father would snatch away all the money Velu and his sisters earned and spend it on drink.
 
     “Don’t think I don’t know. This place is full of children like you. So what are you going to do here? Become rich?”

     She sat down next to him. Velu shifted away slightly.
Explanation:
 
Velu was staring at the girl for a long time. He was looking at her appearance and her way of dressing. After seeing Velu's expression, the little girl told don't stare at her stupidly. She asked him, "What's your name?". In a low voice, Velu murmured his name. The girl came to know that his name was Velu. After seeing Velu's small bundle, she understood Velu had run away from his home.

The little girl enquired Velu, "Run away from home?" Velu did not answer her question because he didn't want to share things about him with a stranger and how he reached Chennai city.

While the girl was speaking to Velu, he reminded his past. Velu had run away from his house because of his father's torture. Velu's father was a drunkard, and he used to beat him and his sisters and take away all the money from them.

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Velu's father beating Velu(Velu remembering his past)

The girl explained to him about Chennai city. She told him that this city was full of children like Velu. On seeing Velu, the little girl asked him what he would do next for his livelihood. She sat next to Velu. Velu felt shy and slightly moved from her side.
 
Meanings of the difficult words:
 
S.No
Words
Meanings
1
StareLook fixedly or vacantly at someone or something with one's eyes wide open
2
MutteredSay something in a low or barely audible voice, especially in dissatisfaction or irritation
3
LivelihoodA means of securing the necessities of life
4
Snatch away To take something or someone away by force
5
Shifted away Move or cause to move from one place to another, especially over a small distance
Reference:
National Council of Educational Research and Training (2008). It so happened. Children at work- Gita Wolf, Anushka Ravishankar and Orijit Sen (pp. 7-16). Published at the Publication Division by the Secretary, National Council of Educational Research and Training, Sri Aurobindo Marg, New Delhi.