Impact investing: Purpose-driven finance finds its place in India
Rising demand for socially responsible and purpose-driven finance has resulted in new ways of putting capital to work the world over. In the past decade, what is now known as “impact investing” has challenged the long-held view that social returns should be funded by philanthropy and financial returns should be funded by mainstream investors.
The global market for impact investments is projected to grow to $300 billion or more by 2020, according to the Global Steering Group on Impact Investment. Although this is still a fraction of the total private-equity assets under management (about $2.5 trillion in 2016), mainstream investors have entered the arena and are bringing scale to what was earlier considered a niche. And the dialogue is shifting rapidly from impact investing to “investing for impact.”
India is fast becoming a test bed for many of these activities. Between 2010 and 2016, India attracted over 50 active impact investors, who poured in more than $5.2 billion. About $1.1 billion was invested in 2016 alone. We hope this report will give readers a sense of how impact investing is developing in India, and debunk some myths that have long surrounded these investments.
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