With the world slowly becoming socially responsible and conscious of the need of others’ in the society, there has been a new wave of purpose-driven finance across the globe. Investors all over are now unleashing the power of the capital by investing in the areas which can have a positive and impactful pay-off while also yielding finance for them. As this avenue of ‘impact investing’ is gaining traction in the world, India is no longer behind in the race. According to a report by McKinsey, the total value of impact investments in the country since 2010 stands at $5.2 billion, out of which $4.2 billion came after 2015.
Impact investing acts as a catalyst in improving the lives of millions while also generating revenue for an investor. More and more entrepreneurs are coming in the market with innovative and creative solutions to work on the social and environmental problems of the ecosystem to serve the nation’s low-income mass.
Given the large size of population and on-going economic slowdown in the country, there has been a shift in the impact investing landscape of the country and it is opening up more opportunities in the sector. Indian investors are realising the impact of the same and have started backing-up organisations who are working towards the betterment of the society.
The key focus areas of impact investment range from clean energy and financial inclusion to education, healthcare and agriculture sector. These sectors have witnessed a number of companies flourishing and attaining large scale impact by gaining support from impact investors. The Impact Investors Council, an association of the impact investors in the Indian business ecosystem, lists more than 30 active investors in the field who are seeking to make a positive impact through their funding and are empowering ventures and associations to promote economic growth in the model.
Impact investing still has a long way to go as the India investor still struggles with age-old conventions and biases. Investors are left worried about the return where they tend to think that impact investing will lead to lower proceeds and won’t have a big impact on the system. Also with the lack of awareness in the market, the full potential of impact investing goes untapped.
But with the better measurement, collaboration and a regulatory framework, the scenario of impact investment can see a robust growth in the country and the investors will be able to make use of the growth capital that is waiting for to be deployed. Associations and government should start working towards creating a more transparent and collaborative model which give the much-needed boost to the avenue of impact investing.
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