BACKGROUND: The availability and optimal utilization of medical equipment is important for improving the quality of health services. Significant investments are made for the purchase, maintenance and repair of medical equipment. Inadequate management of these equipment will result in financial losses and deprive the public of the intended benefits. This analysis is based on the conceptual framework drawn from the WHO recommended- lifecycle of medical equipment. AIMS: (1) To identify the problems in different stages of the life cycle. (2) To assess its financial implications and effect on service delivery. SETTINGS AND DESIGN: Analysis of secondary data from the latest Comptroller and Auditor General (CAG) Reports for the states in India. The study variables were category of equipment, financial implications and problems in the stages of life cycle. STATISTICAL ANALYSIS: Calculation of proportions. RESULTS AND CONCLUSIONS: A total of forty instances mentioning problems in the first phase of the life cycle of medical equipment were noted in 12 state reports. The equipment from the radiology department (15), equipment in the wards (5), laboratory (3) and operation theatres (4) were the ones most frequently implicated. In a majority of cases the financial implications amounted to twenty-five lakhs. The financial implications were in the form of extra expenditure, unfruitful expenditure or locking of funds. In 25 cases the equipment could not be put to use because of non-availability of trained staff and inadequate infrastructural support. Careful procurement, incoming inspection, successful installation and synchronization of qualified trained staff and infrastructural support will ensure timely onset of use of the equipment.