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What is she difference between the Pali Suttas and folklore or the Indian folklore at the time? Is it possible some suttas include folklore as well as authentic words of the Buddha?

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Pali scriptures were brought down by the Sangha who actively practice the teachings of the Buddha. The oral tradition and later the scriptures were verified by many Buddhist councils which were headed by enlightened monks. These councils were held specifically to eliminate alien elements.

Folklore is just stories told by ordinary householders who might not even be Buddhist. ex: Hindus believe that Buddha is an avatar of one of their Gods

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Buddha said when told a sutta, do not reject or accept it right away but remember the details so later to compare to other sutta and vinaya if it doesnt fit well with other sources then it is time to reject it. One sample i can think of is about holy water. in at least 12+ sutta, Buddha rejected and prohibited monks to make holy water but in a sutta where vesali was afflicted by a famine, Buddha gave Ven. Ananda his alms bowl to make holy water to sprinkle around the city to get rid of the illness. IMO, I reject this sutta. There are many sutta especially from Lanna/shan tipitaka that don't really fit well.

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