This paper attempts a sub-state-level analysis of health system for a low-income Indian state, namely, Madhya Pradesh. The objective of our study is to establish efficiency parameters that may help health policy makers to improve district-level and thus state-level health system performance. It provides an idealized yardstick to evaluate the performance of the health sector by using stochastic frontier technique. The study was carried out in two stages of estimation, and our results suggest that life expectancy in the Indian state could be enhanced considerably by correcting the factors that are adversely influencing sub-state-level health system efficiency. Our results indicate that main factors within the health system for discrepancy in interdistrict performance are inequitable distribution of supplies, availability of skilled attention at birth, and inadequate staffing relative to patient load of rural population at primary health centers. Overcoming these factors through additional resources in the deficient districts, mobilized partly from grants in aid and partly from patient welfare societies, may help the state to improve life expectancy speedily and more equitably. Besides the direct inputs from the health sector, a more conducive environment for gender development, reducing inequality in opportunities for women in health, education and other rights may provide the necessary impetus towards reducing maternal morbidity and mortality and add to overall life expectancy in the state.