Distress Financing for Institutional Delivery in India: A Regional Analysis of Economic Inequality, Coping Mechanisms, and Contributing Factors

Background Financial hardship is among the significant challenges in the utilization of maternal healthcare services in India. It is further aggravated by the issue of inequality in the distress financing (DF) for institutional delivery (ID) which pushes the poor into a vicious cycle of poverty. The paper examines the pattern of inequality and regional variation in DF for ID in India. It also determines the factor contributing to the inequality in the DF for ID among a few selected states. Methods The paper uses unit‐level data from the fifth National Family Health Survey (NFHS‐5) round conducted during 2019‐21. The concentration curve (CC) and concentration index (CI) capture the inequalities in DF for ID. Also, the decomposition analysis of CI was performed to capture the contribution of key determinants in explaining the inequality in DF for ID. Results The study reveals that 16.3% of women in India incurred DF for ID, with the poorest quintile facing the highest burden (21.2%). Significant regional variations exist, with states like Telangana (30%) and Manipur (29.9%) showing the highest DF rates. Borrowing is the primary coping mechanism, particularly among the poorest. The concentration index (CI) analysis indicates that DF dominates among poorer women across states. Decomposition analysis highlights wealth status and education as the major contributors to inequality in DF, with significant regional disparities. Conclusions Addressing DF for ID requires strengthening maternity benefit schemes like Janani Suraksha Yojana (JSY) to cover indirect costs and ensure timely disbursements while curbing informal charges. Reducing out‐of‐pocket expenditure (OOPE) through improving accessibility and quality of public hospitals and regulation of private facility fees is essential. Alongside, expanding health insurance for comprehensive maternity care is essential, particularly in high‐inequality states like Telangana, Kerala, and Tamil Nadu. Promoting women's education and economic empowerment, could play a critical role in mitigating long‐term disparities in healthcare.