This paper examines the current status and future prospects of rural health financing and management in India in light of the rural healthcare. Much has been written on this issue and the attempt is to synthesize what is known in the context of the rural healthcare. The paper focuses on the benefits of public health financing and management of rural healthcare in India. The attempt is made to explore the reasons why public spending has been much more effective in improving health outcomes in some regions but not in the rest, and to apply lessons learnt from the 'Disease Control Priorities Project-India', to the question of how best to deploy the new financial resources available. The study raises the issues of service delivery in low-capacity settings. Issues of improving public-sector performance and financing and leveraging the enormous capacity of the private health sector to successfully deliver health care, are central to any health system. The study discusses the mechanics of financing these health interventions and the implications for centerstate financial responsibilities.