India's first Social Impact Bond (SIB): Here's all you need to know
In a maiden innovative move on civic terrain, the Pimpri Chinchwad Municipal Corporation (PCMC) in Maharashtra's Pune district signed a Memorandum of Understanding (MoU) with the United Nations Development Programme (UNDP) India to co-create India’s first Social Impact Bond (SIB).
As part of this unique investment tool, the PCMC administration will only have to bear the costs of a public welfare project associated with the bond, if the pre-defined project targets are fulfilled.
1- This type of bond allows for tracking the progress of the outcomes, thereby ensuring transparency for investors.
2- The mechanism also ensures that funds are used effectively and efficiently towards the project.
3- SIB will support the PCMC in improving healthcare services for citizens, especially with respect to the ongoing COVID-19 pandemic, while incurring minimum investment risks.
4- For the first time, a government body will act as the ‘Outcome Funder’ in a bond. Traditionally, most government-funded public projects require large and early investments by the government with a substantial gestation period of outcomes, along with various kinds of risks.
5- The Social Impact Bond (SIB) will attract more investors both from public and private sectors to fund public welfare projects to meet the investment deficit.
6- The Palladium Group has been appointed for design and structuring expertise for the impact bond.
7- UNDP will provide technical assistance for designing of the SIB through the SDG Finance Facility housed at UNDP. The facility is supported by the Swiss Agency for Development and Cooperation.
8- The SIB will allow PCMC to not only upgrade the infrastructure but also build the capacity of its staff and establish protocols that can support higher quality healthcare.
PCMC is currently operating 30+ primary, secondary and tertiary level healthcare facilities with an aggregate 1,500-bed capacity.
PCMC Commissioner, Shravan Hardikar stated, "The social impact bond places PCMC at the forefront of adopting innovative mechanisms to drive social development, specifically in the healthcare sector, which is the cornerstone of our urban planning. This is in line with our vision of making Pimpri-Chinchwad the most liveable city in India by 2030."
Health and Governance Chief, UNDP, Dr. Manish Pant stated, "Health plays a critical role in achieving the Sustainable Development Goals. We hope that this will lead to the development of a successful public healthcare model that will ultimately address the City Strategy Objectives of Pimpri Chinchwad Municipal Corporation."