Lessons from the past decade on
accelerating social impact
Mains Paper 3: Science and Technology
Prelims level: Not much
Mains level: Evolution of technology
- The impact investing industry made its beginnings in India about
10 years ago.
- One thing that has defined this past decade, it has been the
unprecedented growth of technology, especially mobile phone penetration.
- Aadhaar and the “India Stack” infrastructure such as eKYC, eSign,
and the low-cost payments infrastructure, Unified Payments Interface (UPI).
- Technology is ubiquitous and has become the source of fundamental
transformation in our society.
- It is creating inclusivity for many, instead of exclusivity for
- There has been a significant push towards inclusive growth.
- Thanks to a series of policy initiatives and landmark judicial
decisions, the focus has moved from opening bank accounts to financial
health, from school enrolment to learning outcomes.
- Moreover, issues like ease and affordability of owning a home,
right to privacy and data protection have taken centre stage.
- These developments are driving entrepreneurship in a big way.
- A new wave of purpose-driven entrepreneurs is bringing innovative
business models to improve the lives of the aspiring middle and lower-income
- They will define the future of Indian entrepreneurship over the
next few decades.
- As impact investors, we have six key learnings from our work in
India over the last 10 years.
Key learnings from our work in India
- The mobile phone is one of the biggest drivers of social impact in
- As smartphones become ubiquitous and data costs decline, both
businesses and governments can easily reach populations that they could not
- Many of these people have previously been excluded or underserved.
- Today entrepreneurs can provide a range of services via the mobile
phone to this population segment access to information, education,
healthcare, financial services, transportation, jobs and government
- Learn from failures, but ensure that failures don’t lead to undue
risk aversion. Failure rates in early stage investments will inevitably be
high. Investments can be written off due to a variety of reasons and several
investments will not have the intended social impact.
- Reasons for failures can include the lack of a robust investment
thesis, underestimation of the capital intensity of a business, large bets
on unproven models, and inadequate probing of concerns mentioned during
founder reference checks.
- However, even as we learn from failures, it is important to ensure
that failures don’t inhibit us from making the bold bets that are needed to
drive disruptive and positive social impact.
- The funding quality research can inspire change in many ways. It
can sensitize entrepreneurs to new opportunities.
- Research can also bring valuable data and insights to inform
policy decisions and debates. Reports like Impact Investing: Purpose-driven
Finance Finds Its Place In India by McKinsey in 2017 helped dispel many
myths about impact investing, including the financial returns from impact
- The unlocking supply of capital is catalytic in nascent markets.
Organizations like the Impact Investors Council have played a key role in
creating a greater awareness of impact investing and enabling a greater flow
of capital to impact investing.
- Organizations such as Dasra also help philanthropists in defining
their vision and developing a more strategic approach to giving.
- Similarly, organizations that evaluate progress and impact of
corporate social responsibility or CSR and philanthropic funding are also
helping increase funding availability for social impact.
- A large and complex country like India needs a local approach. A
team on the ground with a deep understanding of the local context and with
strong connections with the players in the Indian ecosystem is critical.
- To focusing on the whitespaces is vital, because pioneering
businesses have a multiplier effect. Entrepreneurs spearheading ideas and
business models introducing new products or unlocking new markets can
accelerate impact beyond just their immediate customer base.
- They can open new markets and drive increased inclusivity and
affordability. They can also crowd in other entrepreneurs and funders into
- Despite India’s major strides over the last decade, a young and
aspiring India wants even more rapid change.
- Increasingly, people from different walks of life are now
confidently stepping up to tackle some of India’s most difficult challenges.
- They believe that India’s growth and prosperity should benefit not
just the “top of the pyramid” but all Indians.
- And so, their focus is on the underserved, excluded and
disempowered in an India that is becoming increasingly digital.
- Over the next five years, 500 million Indians are going to come
online for the first time through their mobile phones, a population we refer
to as the Next Half Billion.
- The coming decade will offer an even bigger opportunity to impact
investors to back bold entrepreneurs who are helping every Indian create a
Q.1) Consider the following statements regarding trend in the social
expenditure as proportion of the Gross Domestic Product (GDP):
1. Health expenditure as a proportion of the GDP has continuously increased
in the last 3 fiscal years.
2. Education expenditure as a proportion of the GDP has continuously decreased
in the last 3 fiscal years.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Q.1) If there is one thing that has defined the past 10 years, it has been the
growth of technology, especially use of mobiles. Critically examine.