Gurajala Ramtulasi, 48, is a former village head from Bhujabalapatnam village in Andhra Pradesh's Eluru district.
Her family said she had kidney-related and other health problems and had been admitted to a private hospital in Eluru.
Family members said she was placed on ventilator support during treatment.
They said doctors at that hospital declared her dead.
She was subsequently being transported by ambulance for funeral rites.
Near Pulaparru village, the ambulance hit a pothole and Ramtulasi began to move.
She was taken to a local hospital for initial treatment and later transferred to another hospital.
Her condition was described as stable, but no hospital statement or clinical details were provided.