Healthcare financing plays a critical role in shaping the accessibility, affordability, and quality of health services. Traditionally, health systems have relied on supply-side financing (SSF), wherein governments or other financing entities allocate funds directly to healthcare providers, such as hospitals and clinics, in the form of budgets, input-based payments, or infrastructure investments. While SSF ensures the availability of healthcare infrastructure and essential medical services, it has inherent limitations, including inefficiencies in resource allocation, limited responsiveness to patient needs, and potential provider-side inefficiencies such as absenteeism and lack of incentives for quality improvement. Growing evidence suggests that although healthcare supply improved, it did not necessarily bring the desired health outcomes. The glaring delays and obstacles in accessing healthcare were poor decision-making for seeking treatment, high out-of-pocket expenditure (OOPE), transportation and treatment costs, loss of wages, and subpar service quality. These impediments were especially true for the socio-economically vulnerable populations, who were primarily supposed to benefit the most from these services. In contrast, demand-side financing (DSF) represents an alternative approach that shifts the focus of financial flows from providers to patients. DSF was introduced as a tool to bridge the gap between healthcare supply and its utilization. The core features to develop successful DSF schemes include specific targeting of beneficiaries, transfer of funds or subsidies, and inclusion of essential services using selected criteria. Hence, DSF schemes aim to actively put the purchasing power in the hands of the user, ultimately delivering the desired results. DSF has been established as a great concept in multiple countries to meet the healthcare needs of the population’s most vulnerable and underserved groups. Each scheme varies in its strategic framework and mechanism. While vouchers and conditional transfers work best for achieving short-term goals, such as institutional deliveries and postnatal care, publicly-financed health insurance schemes ensure long-term financial protection while accessing inpatient services in secondary and tertiary healthcare facilities. In India, national- and state-led DSF schemes have been put in place to address the unmet health needs among the financially disadvantaged groups of society. Despite the observed advantages of DSF schemes, concerns regarding their long-term sustainability have been raised as the main challenge. The other important challenges stem from poor targeting, subpar service quality and non-availability of services, narrow focus of DSF scheme, inconsistent fund pooling and budget allocation, and adverse incentives. Therefore, a well-equipped supply-side service delivery, awareness among the targeted groups regarding the availability of services, timely provision of support in informed decision-making to understand healthcare needs, financial support to access healthcare services, and improving healthcare staff, and provider skills for a more favourable experience are crucial to achieving the desired objective of any DSF program. This chapter provides an overview of DSF mechanisms and challenges in its implementation in India.