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Approximately 900 000 newborn children die every year in India, accounting for 28% of neonatal deaths globally. In 2011, India introduced a home-based newborn care (HBNC) package to be delivered by community health workers across rural areas. We estimate the disease and economic burden that could be averted by scaling up the HBNC in rural India using IndiaSim, an agent-based simulation model, to examine two interventions. In the first intervention, the existing community health worker network begins providing HBNC for rural households without access to home- or facility-based newborn care, as introduced by India’s recent programme. In the second intervention, we consider increased coverage of HBNC across India so that total coverage of neonatal care (HBNC or otherwise) in the rural areas of each state reaches at least 90%. We find that compared with a baseline of no coverage, providing the care package through the existing network of community health workers could avert 48 [95% uncertainty range (UR) 34–63] incident cases of severe neonatal morbidity and 5 (95% UR 4–7) related deaths, save $4411 (95% UR $3088–$5735) in out-of-pocket treatment costs, and provide $285 (95% UR $200–$371) in value of insurance per 1000 live births in rural India. Increasing the coverage of HBNC to 90% will avert an additional 9 (95% UR 7–12) incident cases, 1 death (95% UR 0.72–1.33), and $613 (95% UR $430–$797) in out-of-pocket expenditures, and provide $55 (95% UR $39–$72) in incremental value of insurance per 1000 live births. Intervention benefits are greater for lower socioeconomic groups and in the poorer states of Chhattisgarh, Uttarakhand, Bihar, Assam and Uttar Pradesh.