What is meant by Development impact bond? Does it remain as a strong financial model for socio-economic upliftment for developing countries like India? Analyse. (200 Words)
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IAS Parliament 6 years
KEY POINTS
· Development Impact Bonds (DIBs) finance development programs with money from private investors who earn a return if the program is successful, paid by a third-party donor.
· The outcomes to be measured are agreed upon at the outset and independently verified.
· With greater focus on outcomes instead of inputs, DIBs create space for more innovation, local problem-solving, and adaptation.
Analysis of Development impact bond
Development Impact bonds offer some valuable positives :
· These include unlocking new funding streams and the privatization of risks for public benefits.
· DIBs maintain a sharp focus on outcomes, based on which payments are made to investors, these instruments also up the stakes in terms of programme implementation, performance management, and monitoring.
· Britain has launched a new 10-million-dollar Development Impact Bond (DIB) to help improve education for over 200,000 children in India.
· This helps achieve transparency and forces programmes to adapt to changing circumstances, while continuously learning from the ongoing evaluation exercises and results.
DIBs poses challenges.
· There is no evidence that SIBs/DIBs are a more efficient way of financing development. Their value for money vis-à-vis other forms of financing is not established, but only a matter of theory so far.
· DIBs are results-based finance mechanisms and the donors/philanthropists only pay for successful results. If the outcomes are not achieved, the funders do not pay.
· DIB focus on outcomes, on which financial returns are contingent, spurred optimism that new innovations and models for delivery will be tried to achieve these outcomes, most programmes funded by DIBs use tried and tested models for service delivery.
· The ecosystem is still small and closed to an extent, comprising more or less the same set of donor agencies, foundations and sometimes governments. There is little evidence of more and fresh investment getting crowding in.
· The model, while worth trying out and too new to criticize, tends to give precedence to funders and intermediaries in setting the terms of intervention.
Raj Mani 6 years
Santosh kulkarni 6 years
Kindly review. Thanks.
IAS Parliament 6 years
Good answer. Keep writing.
Krish 6 years
Kindly evaluate my paper sir
IAS Parliament 6 years
Try to include the criticisms part of the DIB. Keep writing.
Bini J George 6 years
Kindly check.
IAS Parliament 6 years
Try to include about the criticisms of the bond. Keep writing.
Sarvjeet kumar 6 years
please review
IAS Parliament 6 years
Try to include about profit motive. Keep writing.
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