NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, August 30, 2019

By Shamika Ravi and Prerna Sharma

Achieving the ambitious sustainable development goals (SDGs) by 2030 will take an estimated $5 to $7 trillion per year, with a financing gap of $2.5 trillion in developing countries. In India alone, the outsize challenge has been translated into a financing gap of $565 billion. Closing this gap requires action on several fronts; efficient and effective domestic resource mobilisation, outcome-focused donor efforts to ensure that money is spent well, and harnessing private capital. In recent years, interest has grown globally to develop new investment approaches, such as impact investing or purpose-driven finance.

Typically, impact investing does not take place in large-cap markets, but in areas that have service provisioning gaps. In India, impact investors are committed to solving development problems, given the sheer size of populations in need but there is also a strong financial motivation to invest in ideas that serve dual bottom-lines.

In a recently released state of the sector report on impact investing, the size, scale and scope of the impact investment market in India was highlighted. Anchored on a primary survey conducted by scholars at Brookings, the report is structured around four key tenets of impact investment market activity — market trends in India, sector-level analysis, innovative financing and measurements.

Photo courtesy of Satish Krishnamurthy.