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Background: Institutional delivery is one of the key and proven strategies to reduce maternal deaths. Since the 1990s, the government of India has made substantial investment on maternal care to reduce the huge burden of maternal deaths in the country. However, despite the effort access to institutional delivery in India remains below the global average. In addition, even in places where health investments have been comparable, inter- and intra-state difference in access to maternal care services remain wide and substantial. This raises a fundamental question on whether the sub-national units themselves differ in terms of the efficiency with which they use available resources, and if so, why? Methods: Data obtained from round 3 of the country's District Level Health and Facility Survey was analyzed to measure the level and determinants of inefficiency of institutional delivery in the country. Analysis was conducted using spatial stochastic frontier models that correct for heterogeneity and spatial interactions between sub-national units. Results: Inefficiency differences in maternal care services between and within states are substantial. The top one third of districts in the country has a mean efficiency score of 90 per cent or more, while the bottom 10 per cent of districts exhibit mean inefficiency score of as high as over 75 per cent or more. Overall mean inefficiency is about 30 per cent. The result also reveals the existence of both heterogeneity and spatial correlation in institutional delivery in the country. Conclusions: Given the high level of inefficiency in the system, further progress in improving coverage of institutional delivery in the country should focus both on improving the efficiency of resource utilization--especially where inefficiency levels are extremely high--and on bringing new resources in to the system. The additional investment should specifically focus on those parts of the country where coverage rates are still low but efficiency levels are already at a high level. In addition, given that inefficiency was also associated inversely with literacy and urbanization and positively related with proportion of households belonging to poor households, investment in these areas can also improve coverage of institutional delivery in the country. [ABSTRACT FROM AUTHOR]