How Impact Bonds Can Tackle Systemic Livelihoods Challenges in India


Priyaka Dhingra

How Impact Bonds Can Tackle Systemic Livelihoods Challenges in India


5 min read

India ranks low at 129 among 189 countries in UN’s Human Development Index[1], reflecting the myriad of social issues that need addressing. Whilst not all issues can be quantified to translate social benefit into economic benefits, the ones that can should not hide behind narratives of activity and anecdotal stories.

As management guru Peter Drucker says, ‘you can’t manage what you can’t measure’. As the M&E field evolves, we are in an advantageous position to hold ourselves accountable for developmental progress. The question is, are we willing to be held accountable?

As the funding gap on social fronts accentuates due to the pandemic, considerable attention needs to be given to i) sharper outcome-driven approaches in both public and private funding mechanisms and ii) galvanizing mainstream capital towards social sector. Impact Bonds hold a promising proposition of delivering these effectively.

Catalysing Private Capital

Early investors who have started participating in these pay-for-success structures include not just philanthropists but also private wealth firms and large corporates.  UBS is a leading player in DIBs (Development Impact Bond), and has leveraged its foundation arm Optimus, to channel investments from its private wealth clients towards these structures. Their pioneer Education DIB in 2015 improved the literacy and numeracy outcomes for 15,000 children in 166 schools across 140 villages in Rajasthan which has low female literacy rates at 52%. The program helped enroll out-of-school girls and worked closely with the teachers to drive child-centric interventions in order to improve learning outcomes (achieved 160% of target). Encouraged by the results, they have participated in another USD10mn bond for education in Rajasthan, Delhi and Gujarat.

Down south, Waterfield advisors has recently galvanized investments of USD 15mn in three series from its clients towards economic liberation for Small and Marginal Farmers in a sustainable manner. Indian banks who have joined such forces for good include SBI and Indus Ind’s CSR efforts of more than USD 2 mn. This bond has driven improvement in learning outcomes for ~115,000 Grade 1 and 2 students across 7 districts in Haryana (~3,300 schools). Among corporates, Essilor, a world leader in ophthalmic optics, is deeply vested in bringing livelihoods to rural India and is supporting the launch of a DIB to create micro-entrepreneurs in order to bring vision care in areas where it was unavailable before. Since 2013, they have also invested deeply in the capacity-building of these entrepreneurs. As a result the program has generated significant impact on the entrepreneurs and on people equipped with glasses, with a Social Return On Investment (SROI) of 48X (per Dalberg’s assessment). The DIB structure will allow for multiple partners to collaborate on and scale this program across multiple States in India.

As we templatize these structures, the costing curve flattens, making them more economically efficient and ready for replication with economies of scale.

Role of Public Sector

In most developed countries, public capital tends to be the outcome funders since the government is held accountable for taxpayers’ money, which is budgeted towards these programs. The Indian public sector is making its foray in this space with  National Skill Development Corporation (NSDC) by participating in a 4-year Social Impact Bond with alongside Michael & Susan Dell Foundation (MSDF) to drive skilling & livelihoods potentially across 1L beneficiaries.

The Ministry of Finance has already taken strategic steps towards institutionalizing the social sector’s efforts by proposing the Social Stock Exchange. Securities and Exchange Board of India’s (SEBI) High-Level Committee has the most notable foundations, philanthropists and impact investors who have laid out the contours of this promising platform. The recently released report emphasizes on the potential of these innovative social finance structures and clearly illustrates these frameworks inspired by best practices in the region.

The potential of Livelihood-focused DIBs

India has a high unemployment rate of 7%[2], which is even more severe in tier three and rural districts, and further aggravated by rural distress & reverse migration. Every year, billions of dollars are spent by the private and public sector on livelihood training programmes, yet most of these programmes struggle with placements which are in the 50-60%[3] range.

As the narrative in the sector changes from discussing budgets to accounting for the amount spent, outcome-orientation will be key. With the availability of measurable indicators such as placement, entrepreneurships and job retention statistics, livelihood programmes lend themselves well to a DIB structure. Whilst the social benefits of livelihoods accrue in the medium to long term in terms of household health, education, well-being, there is enough and more global evidence that these short-term indicators are good proxies for measuring social outcomes over the long term. This includes even the qualitative indicators, such as well-being and women empowerment, which are as critical, if not more.

Sustainable livelihoods will not only unlock economic benefit, but also add tail-wind to social benefits, especially during times when rural economies are under pressure from reverse migration on account of urban job losses. How do we create an opportunity by leveraging the demographic dividend of India’s rural districts and promoting micro-entrepreneurs who can be champions in their own communities? The answer lies in investing in building their capacity & capability so that they feel empowered and have the agency to change the course of their lives.

This is where the role of philanthropic capital becomes key, as demonstrated by MSDF and Essilor in livelihood programs in India. Philanthropy seed funds these initiatives in order to de-risk these livelihood models, builds evidence around these structures, and finally encourage public capital and mission-oriented private capital to participate through collaborative structures such as Impact Bonds.


An outcome-focused approach is an important step toward encouraging funders & implementers to be more effective in serving society’s neediest citizens. We owe this to every unit of monetary or human capital resource that is invested in the name of social good. With India’s annual SDG gap at USD560 bn dollars[4], we will have to think creatively and collaboratively in order to bridge the glaring social sector gaps and address lofty developmental issues we face as a Nation.

A panel discussion on the above topic was organized by AVPN. The recording of the webinar can be accessed here.

[1] 2019 UNDP report

[2] CMIE October 2020

[3] PMKVY 16-20

[4] 2019 Cambridge University Press


A. Environmental Stewardship
To protect the environment, we organize programmes like mangrove nursery and Reforestation, Coastal and River Clean-Up, Community Based Environmental Solid Waste Management, Environmental IEC Campaign and Eco-Academy

B. Food Security and Sustainable Livelihood
To ensure a sustainable livelihood for the community, eco-tourism include Buhatan River Cruise Visitor Center Buhatan River Mangrove Boardwalk are run by the community. Others include Organic Vegetable and Root crops Farming, Vegetable and Root crops Chips and by-products Processing and establishing a Zero waste store.

C. Empowered Communities
To empower the community, we provide product and Agri-Enterprise Development Training, Immersion and Learnings Exchange Program, Earth Warrior Training and Community Based Social Entrepreneurship Training


Priyaka Dhingra

With extensive experience across Social Impact and Finance, Priyaka is currently an advisor with Essilor’s social impact team for their Livelihoods Impact Bond. She has managed the philanthropic portfolio of Amit Chandra (Chairman Bain Capital and Forbes Asia hero of Philanthropy) over a large part of last decade and then went on to set up their family foundation. As a drafting committee member for the creation of India’s Social Stock Exchange (Ministry of Finance) she focused on innovative structures for social finance deals and also contributed to the social finance frameworks in the CSR Policy High-level committee. Her profile was recently chronicled in Rockefeller Foundation’s ‘Women Leadership in the Development Sector’.

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