Giving Compass' Take:

• Mohit Saini reveals the growing importance of impact investing in India, which stems from a focus on positive community outcomes.

• How does impact investing place a premium on the well-being of those being served, as opposed to those doing the investing? How can you place focus on communities in your investing strategies?

• Read more about impact investing in India as a means for education reform.

Increasingly, impact investors in India are thinking beyond the trade-off between doing good and doing well. Experienced investors acknowledge the potential of private capital to address social issues and achieve financial return (doing well) while creating a positive impact (doing good).

To some extent, impact investors have started considering impact as a key non-financial criterion in their investment decisions. However, there is no universally accepted definition of impact and impact measurement metrics in India. This leaves significant subjectivity in defining and interpreting impact as well as clearly identifying impact-first investors. Most investors associate investments in sectors like financial inclusion, food and agriculture, education, and water and sanitation with impact investing. They define impact based on their own values, goals and preferences.

In the last 5-6 years, impact investing in India has generated significant traction. One key milestone is the incorporation of the Impact Investors Council – a leading industry body to accelerate impact investing in India – in 2014. Additionally, India is home to the world’s first Development Impact Bonds (DIBs) in education and healthcare. Such progress, in addition to continuous interest among global investors, will make impact investing an integral part of mainstream investing in India.

In fact, India is in need of such a transition, as impact investors have only scratched the surface of the problems in the country. Brookings estimates that India faces an annual financing gap of $565 billion to achieve its SDG targets. The government, of course, cannot bridge this gap on its own. This creates a huge opportunity for value-driven mainstream investors to deploy their capital and analyse investment opportunities through an impact lens as well.

Read the full article about impact investing in India by Mohit Saini at Alliance Magazine.