The judgment of the Supreme Court in National Legal Services Authority v. Union of India while a landmark development in recognition of transgender rights, threw open a Pandora’s box full of questions having moral and legal dimensions. One such question pertains to the obligation of the state to fund gender affirmative healthcare services such as sex reassignment surgeries (‘SRS’). Given how prohibitively expensive they are, this paper interrogates whether the state has a duty to provide for such healthcare services and attempts to provide a normative justification for the same. In the process, it rejects the two most popular reasons advanced for state funding – the identity thesis, and the autonomy framework. Drawing from Amartya Sen and Martha Nussbaum’s capability approach, it instead argues for a shift towards an assessment based on the impact healthcare services have on the ‘quality of life’ of transgender persons.