Varsha Aithala

Varsha Aithala is a Research Fellow at the Centre for Constitutional and Legal System Reform, Azim Premji University, Bengaluru. As faculty at the University’s School of Policy and Governance, she teaches courses on ‘Philosophical Foundations of Private Law’ and ‘Legal System Reform’ in the LLM and MPG programmes. She obtained a Master’s of Corporate Law degree from the University of Cambridge and a BA LLB (Hons) degree from Nalsar University of Law, Hyderabad. Her research interests span the areas of contract law, corporate law, legal system reform, legal education and the legal profession. Prior to this, she has worked as a senior associate in the corporate practice of Samv_d: Partners, Bengaluru. She has more than ten years of extensive practice experience in corporate and commercial laws in India and the United Kingdom. She specialises in international and domestic private equity and venture capital investment transactions. She is dual qualified, as an advocate in India and solicitor in England and Wales.

Designation: Azim Premji University
Institution: Azim Premji University
Paper: Transplanting Impact? A Case Study of the Educate Girls Development Impact Bond
Abstract: Through the promise of making aid Òmore transparent, stakeholder-led, and effective, the private sector is moving towards innovative financial instruments to bridge the resources gap in education, health, employment and criminal justice sectors. Impact investment through Payment for Success ('PFS') contracts is becoming popular, as Social Impact Bonds ('SIBs') or in developing economies, Development Impact Bonds ('DIBs'). The world's first DIB in the primary education space, Educate Girls DIB, was launched by UBS Optimus Foundation in 2014, with the objective of improving enrolment and retention levels of out of school girls in primary schools. After a three-year term, the project over-achieved targets: enrolment at 116% (92% of girls between 7-14 years), 61% overall student grades improved compared to the control group and 160% learning targets (8,940 learning levels) achieved in English, Mathematics and Hindi. But this ‘quick-fix’ investment model throws up several issues. The investment structure as currently practised, is often complicated, highly technical, resource intensive and time consuming. Service providers find it difficult to understand the sophisticated outcome-based payment framework, since its approach is different from standard grants or conventional aid processes. Interventions have a narrow focus, namely, to achieve certain predetermined outcomes, using data generated in-house. Known players and established ideas have greater chance of success, ultimately resulting in longer term social costs. The interventions may replicate existing aid efforts and crowd out investment in more effective competing ideas. SIBs therefore represent an ‘ideological shift in welfare service provision’ by the State (Roy, McHugh & Sinclair, 2018). This is particularly problematic in the primary education sector, where sustainable results are difficult to achieve in the short project cycle (3-5 years) and usually require patient capital. The project first explores the key features of the impact investment model in the Global North (particularly, UK, Australia and US) and compares this with the experience of the South, particularly India. This is followed by a comprehensive case study on Educate Girls DIB, which reveals several issues with the investment model. Based on the interview findings and a critical analysis of the literature, the project examines the means through which this instrument can be effectively adopted in India. It concludes that while impact bonds are a critical supplement to the existing project financing methods, traditional sources such as grants, donations and development aid will continue to play a major role in investments for priority sectors like primary education, healthcare, sustainable agriculture and livelihoods, in middle income countries like India. The project adds to the significantly increasing critical literature on impact bonds (Clist & Dercon, 2014; Owen Barder et. al, 2014; Gustafsson-Wright, Gardiner & Putcha, 2015) which question blind reliance on this model as a panacea for all of the State’s development needs.”