Impact investments in India

Abstract

While there are various social re&ponsibility and investment models currently active in India ranging from completely profit driven with incidental focus on impact, corporate social responsibility to completely philanthropic donations to trusts and charitable societies. A new type of investing theme focusing on environmental, social, and corporate govemance (ESG) has also emerged - with &pecial bonds and mutual funds being structured accordingly. Within this mnge, impact investments have also emerged that have clearly defined intentionality for delivering an impact which can be 'measured' explicitly. The target is not to not only mitigate negative impacts but to further deliver a positive impact to the society. The segments targeted for impact investing should have the following characteristics. They should be satisfYing an existing ( unmet) market need. They should have an explicit social objective or have the potential to be a sustainable. and scalable business which can genemte impact alongside financial retums. In the present context when India, along with the world, targets to attain the susta inable development goals by the year 2030, a financing gap of at least $565 Billion has been proj ected. In a survey conducted across social enterprises in India, for 57% of them, growth was hindered by a lack of access to debt or equity financing. In such a scenario, interventions such as these may help resolve critical bottlenecks. Further, in an emerging economy like India with a much sparser social security net than developed nations like the UK or the USA, the distributive and fiscal effects of impact investing activities can have a very large welfare impact.