Contrary to the widespread belief of increasing inequality in the health sector, this paper observes that economic status-related inequality in inpatient care utilisation has declined in recent years. However, a lowering of inequality has not made the situation more equitable for the poor because of a high increase in the rate of inpatient care utilisation, a decline in dependence on government hospitals and a steep hike in the cost of inpatient care. In a majority of states, the average cost of inpatient care, even at government hospitals, has grown at a much higher rate than the prices of essential food items. The hardships faced by the rural poor to meet healthcare expenses show that the net result has been a welfare loss for them.