Episode 22: Financing Resilience, Inclusion, and Development with Karanraj Chaudri

Speaker A: Foreign. Welcome to the 22nd episode of the Blended Finance Podcast brought to you by the Blended Finance Company. At the Blended Finance Company, our goal is to increase the flow of capital to the development sector. And we do that by pioneering blended finance programs that enable investors to deploy significant amount of capital to while generating sustainable returns and donors to maximize their catalytic leverage. A lot of heavy words there, I realize. And that is precisely why we decided to start this podcast to demystify blended finance and to understand what it can and equally importantly, cannot achieve. Through these podcasts, we bring to you some of the foremost thinkers and practitioners of blended finance globally who would be sharing their insights and experiences with us. I'm your host, Nirav Khambati, partner at the Blended Finance Company. And today we have with us Karan Raj Chowdhury. Karan works with UNDP's Bangkok Regional Hub as a climate finance and private sector specialist, supporting private sector engagement as well as blended and innovative finance mechanisms linked to the Climate Finance Network's six work streams. He also leads the broader sustainable finance portfolio for the UNDP India Country Office. He has led the secretariat for India's Ministry of Finance's Task Force on Sustainable Finance and serves on the advisory board of the Social Stock Exchange. He was also the focal point at UNDP for India's G20 presidency. Welcome to the Blended Finance podcast, Karan.

Speaker B: Thanks, Nirav. An, uh, absolute pleasure to be here.

Speaker A: Karan, I'm going to dive straight into the podcast. You worked at the intersection of sustainable finance, climate action and private capital mobilization across Asia Pacific, including India, of course. How did your journey evolve from Maria Kali roles? I've noted that early days, uh, were corporate finance for you. You've also done impact investing and currently, uh, you're doing what I've just described at undp. How did all that come together?

Speaker B: Thanks, Nirav. No, I think that's a question I found myself, um, reflecting on because it's, uh, a journey that's perhaps not as linear as some other colleagues in the space. But I started out, as you said, with mainstream professional services. I was at PwC for nearly five years working in advisory, and then I spent time at a boutique research firm. Good work, really interesting work, but fundamentally sort of oriented towards established capital markets and established clients. And I have to say that at that point, uh, impact wasn't really part of the vocabulary. I knew development as a field, uh, but I didn't really have a very clear picture of where finance and development sort of genuinely met. And I think for me, the Sort of turning point was uh, my sort of MBA program. And that sort of really exposed me to impact investing in a much more serious way. And I think different business schools have different sort of characters. And for me the sort of impact investing and the development finance piece was one that was really sort of standing out. So after my mba I actually then ended up working as you said, um, at Acumen, which is an impact investing firm focusing on South Asia but also actually a fair bit uh, in Africa, Latam and other markets. And that was a very sort of formative experience in a practical sense to get a sense of how patient capital is deployed, how you're working with low income communities. Because that was really the poverty sort of focus was very high at Acumen. And then after that I was just keen to sort of move back to Delhi and there was a role at UNDP which seemed unconventional for the organization at the time, sort uh, of building out their capacities on innovative financing and sustainable financing. And that's where I found perhaps this sort of a different opportunity which is not focused on investing in enterprises or in projects, but really much broader engagement at a systems level. So that upstream systemic work, working with governments, working on financing frameworks, also on instruments, but quite significantly on that larger enabling environment. Uh, and that's the piece that I've really been focusing on pretty much during my time with the Asia Pacific office as well and as part of the Climate Finance Network.

Speaker A: You know, when you say that I uh, can relate so well to that. For the first 20 years of my career I had no idea about the field of impact finance. I mean those 20 years were with the Tata Group in various corporate roles. And as part of those roles we did come across the whole thinking around CK Prahlad's fortune at the bottom of the pyramid. But still it was seen as more like what's a business opportunity which is available uh, at the bottom of the pyramid. The impact lens to financing actually came much later in my life too, uh, when I sort of uh, became an asset manager impact investor, like kind of stuff that you've done uh, much later on. So thanks for sharing that Karan. Uh, uh, one thing I certainly owe to UNDP is that during that process of learning about impact investing, the framework that helped me the most was the Sustainable Development Goals framework. And UNDP in India has operationalized the Sustainable Finance Facility to enable sub national, which is basically for our listeners at the state level technical assistance for uh, Sustainable Development Goals or SDG as they called SDG financing. What gaps uh, did this facility aim to fill and um, how, how do you see it evolving um, over the next two to three years.

Speaker B: The core gap that the Sustainable Finance Facility was really designed to address was this sort of distance between national ambition and sub national delivery. So in India we have a very sophisticated sort of central policy environment uh, for sustainable development. We have the SDG index, we have budget tagging sort of frameworks that continue to be refined, we have national action plans. But when you look at work at the state level there's often a gap in terms of translating these frameworks into sort of financeable instruments or financeable opportunities. And you know, when you sort of step back, state governments are really the ones that are responsible for delivering the bulk of India's SDG commitments. So whether it's on health, whether it's on education, um, on agriculture, on climate adaptation, but their sort of access to innovative financing instruments has sort of been a bit limited. And when I sort of say access or limitation, it's not that state governments perhaps are not deploying these instruments, but what we actually found was that we would get a number of requests to uh, sort of work with state governments uh, on sort of designing these financing instruments by whether it's thematic bonds, whether it's blended finance structures. And a bond framework that's perhaps designed for a central government issuer will look very different to one that's suited to a state level development finance entity or a blended finance structure that works in Maharashtra may need to be sort of re engineered significantly to work in Bihar. And I think that gap, that piece very much at the early stage of working with government counterparts to help them design instruments that are suited to their pipeline, their priorities, their fiscal realities. I think that really is the gap that the facility uh, aims to fulfill. So it has a very specific mandate and a very specific purpose. And it's also sort of a natural outcome of India's G20 presidency and the work of the Sustainable Finance Group, uh, under India's sort of G20 presidency, which had a focus specifically on sort of scaling the adoption of social impact investment instruments, but also sort of prioritized work on climate finance uh, mechanisms as well. So looking at this, you know, over the next couple of years, I certainly see the facility moving towards greater demonstration, greater uh, sort of demonstration value. And we're at the stage where we need to be able to support some very concrete transactions, whether it's a state uh, level impact bond, whether it's uh, you know, climate resilient sort of infrastructure fund with blended capital. So we want to be able to sort of demonstrate the success of some of these. And the real sort of success factor for us, and I think you'd agree as well, is when other states or other institutions want to be able to replicate and build on that in their own context. And I think that's really the work that we are trying to do with the Sustainable Finance Facility.

Speaker A: Very interesting, Karan. You know, actually those who've not worked in India uh, find it really hard to fathom the level of socio economic diversity that resides within our 28 states and eight union territories. I mean India has these 36 federal entities and they are significantly different and therefore uh, structures that work in one part of the country, uh, financial structures, political structures, uh, I would dare say even cultural structures, there is absolutely no guarantee to the fact that uh, they'll work in other parts as well. So thank you for doing what you're doing at UNDP in ensuring that uh, successful structures uh, also get adapted to other contexts. You were closely involved in the report on strategic framework for blended finance that was uh, recently published by UNDP's Climate Finance Network. And in that report uh, there is emphasis on moving beyond just one off transactions to systematic market development. Could you lay it out for us Karan? In practical terms, I mean what are the first two to three steps you recommend a government or development partner takes to operationalize that shift?

Speaker B: Right, so there's, you know, I think over the last perhaps decade or so we've seen so much discussion on blended finance. It's as a terminology, as a frame of reference, it's really taken on a very central uh, sort of space in the development finance discourse. Whether it's at sort of multilateral fora, whether you know, at forums like G20 or sort of climate Cops and others. And what we were really sort of looking at was the fact that the vast majority of blended finance transactions, as you, as you just said, are these one off transactions that are very specifically engineered in a very specific context and often they sort of tend to stay as one off transactions that we talk about and we talk about at various forums and we present as case studies. Uh, but the fundamental problem is that they often don't replicate, they often don't sort of become markets unto themselves themselves. Right. And that's a, a very fundamental problem when we are dealing with an SDG financing gap that's you know, upwards of $4 trillion a year. So what this framework that, that we've just put out, what that's really looking to do is, is a, uh, is a few different Things, but maybe like three key takeaways if I could. One was that how do we sort of build the policy and the regulatory environment for blended finance, first, not as an afterthought to a transaction, but really look at the fundamentals that are needed from a policy and a regulatory perspective. Because ultimately for sort of capital to move the unpredictability around a policy environment, uh, is a big sort of perceived risk and is a big factor. So how is it that governments can anchor blended finance within their sort of national financing strategies or within their integrated national financing frameworks, signaling that it's not just uh, a pilot, but the fact that it's uh, a sort of systematic commitment uh, to advancing blended uh, finance ecosystems. And the second is what we're really trying to also highlight, and that's really relevant given where we are today from a geopolitical perspective, from the perspective also sort of declining overseas uh, development assistance, is that governments have two but very distinct and complementary roles that they can play. The first is as a sort of a facilitator, so setting clear priorities, stable regulatory standards, uh, setting up sort of institutional arrangements that can perhaps reduce uncertainty. And the second is also as a doer, uh, so strategically sort of deploying concessional capital, anchoring some of these early stage market structures, supporting things like project preparations, particularly for sectors where private solutions are not as viable. So in a number of sectors, let's say, to do with climate adaptation. And the third perhaps key sort of takeaway is, is also around impact measurement and management and the whole information architecture around blended finance, that the returns from these transactions are often not just financial. There's a sort of intent for social returns, for uh, you know, strengthening resilience. They're uh, often about economic security of communities. But if those returns are not being measured, if they are not being reported supported, if they're not being communicated in a sort of a credible manner, then the market also cannot sort of price them in the right manner, right. So cannot sort of bake those social returns in. So the framework, which sort of has six uh, different pillars, also provides uh, and has a big sort of emphasis on impact measurement and management. And the idea of the framework is that it's not a sort of a one size fit all. We recognize that different countries are on different paths, on different trajectories. There are different sort of underlying realities. Um, and so the idea is just to sort of lay out all of these considerations and work with governments to see where is it that they would like to sort of come in and you know, what perhaps is the right entry point in sort of different country contexts, um, and situations.

Speaker A: All this, as you can imagine Karan, is music to our ears at the uh, blended finance company. And uh, we completely endorse the view that you've just taken around. Not just the need for blended finance but also the need for a more proactive uh, approach at the sovereign level towards blended finance. Recognizing the potential that blended finance offers and also the challenges today that blended finance faces, uh, which need to be in a very systematic manner overcome, uh, such that uh, markets don't get distorted and uh, at the same time every dollar of uh, government capital or catalytic capital is put to its best possible use. Karan, if I can maybe ask you one more question uh, related to this topic, I would honestly uh, highly encourage all our listeners to read the report. Uh, is there any particular practice in any of the countries that you looked at that really stood out for you? Something which you felt was relevant for India and perhaps other countries in um, uh, the Global south from enablement of blended finance perspective?

Speaker B: Yeah, I think one piece that sort of stood out as part of a lot of that research was I think there's sort of institutional mechanism in the institutional architecture around blended finance because it's not one thematic area. Right. So blended finance is a very cross cutting sort of piece. Just like development finance, it can cover everything from gender equity to housing to climate and environmental goals. Ah. So how is it that you actually bring together the these different sort of line departments and ministries uh, through more sort of institutional platforms to engage on this sort of topic. And I think one that sort of stood out for me was let's say the work in the Philippines uh, where they have this uh, sort of inter ministerial task force on sustainable finance that brings together different parts of the house, uh, that sort of not just convene but also deliberate on very specific issues that impact the sustainable finance ecosystem at large, of which blended finance is an important subset. So whether it's work on taxonomy development, whether it's work on disclosures, um, and that larger information architecture, uh, or it's also work on sort of looking at some of the regulatory and the policy changes that are needed to sort of catalyze blended financing at a country level and I thought that that institutional architecture is something that is actually worth looking at. I mean I would say that it's not necessarily one that's uh, directly applicable to the India context. We have done similar sort of exercises. But there is a lot of value in bringing together the different sort of line departments and ministries that are working on this issue.

Speaker A: That's so true. Actually a lot of the development challenges that we see cut uh, across various sectors. And at least in India, the uh, line ministries are organized sectorally. Uh now if one looks at let's say a challenge like climate adaptation and if climate's uh, impacting uh, livelihoods and if there are investments to be made to overcome those challenges, you know, which is the line ministry that one should be talking to about that. Is it environment, is it uh, you know, skills development and entrepreneurship? Or is it ministry, uh, of Urban affairs? I also see that uh, recently in Maharashtra where uh, we are engaged in some of the work, the uh, government's created a new secretariat around uh, climate investments, which I thought was quite a smart move. But thank you for giving this example from Philippines because that's exactly, I feel something that governments will have to uh, emulate, uh, to be able to tackle these uh, challenges on a more uh, uh, robust basis I would say. But uh, you mentioned uh, climate adaptation now several times and I've always noticed Karan, that rural and urban gender equity remains a recurring theme in your work. Uh, what innovative financing structures you think can help unlock capital for areas like adaptation, resilience or non traditional other sectors?

Speaker B: Yes, I think, you know, gender equity or sort of climate adaptation. This they almost sort of share uh, a common sort of structural issue, uh, in the sense that they both represent areas where, or investment areas where the social returns are absolutely enormous. But in many cases the, you know, the private returns as perhaps conventionally measured appear either too small or too diffused to attract commercial capital, um, on their own. And I think that that's perhaps precisely where uh, innovative financing structures have the most to offer. So if it's, I would perhaps say that you know, looking at three sort of aspects. The first, in terms of how is it that uh, a first loss or a guarantee layer can actually de risk commercial capital and allow lenders to perhaps underwrite at slightly lower rates? Uh, the second, which I sort of go back to a fair bit, is around sort of strong impact measurement and management that sort of really makes the gender and the climate outcomes both measurable and credible to investors and to regulators. Because in a, in this whole sort of piece of blended finance, we are looking at a concessional tranche coming in as well. So different sort of parts of that capital stack have different motivations. Uh, and so making that case around impact becomes incredibly important in when you are talking about, let's say climate adaptation or we're talking about gender Equity. And the third sort of aspect is perhaps around aggregation because often these individual transactions may be too small to attract institutional interest on their own. And I think that's the other sort of issue that we grapple with in, in the sort of blended finance space is that we are often sort of put in that position where, okay, let's sort of do a pilot or let's structure a transaction, but then how do you really take that to the next level? Right, so there's a, a fair bit that, that we are certainly trying to do when it, when it comes to uh, to both sort of uh, joint gender equity and climate adaptation. We just for example released a report, uh, I think perhaps a month ago on how is it that we can look at blended financing models for childcare. So this might not be, let's say, an obvious sustainable finance story, but it's a really important one. So there are 6 to 7 million women from low income urban households in India who actually need quality, affordable childcare. And this is a number of 6 to 7 million that could potentially triple by 2047. Uh, and yet we see that existing public and private provisioning is meeting perhaps only a fraction of that demand. So the financing gap here is actually quite structural. The market exists, the demand is real, but we don't necessarily have a single capital provider that can address it alone. And we perhaps don't even have a single sort of childcare operator that can sort of implement a solution at that scale. So you know, this is an example of something that we are actually thinking about right now. Um, in terms of how do we look at this space, how do we go first as undp, how do we go beyond report? Because that's something that we are very sort of cognizant of as well, is that the idea is not just to create a report, but let's take it to the next level and then see how is it that something like that can actually sort of complement and inform um, government policy in that space.

Speaker A: Affordable childcare is such a strong lever that's available to developing countries. Uh, on one hand, uh, you're preparing your young generations by giving them the right kind of education and nutrition. On the other side, you're enabling women to go back to work. You're actually creating even employment opportunities at these child care centers because most of the uh, attendants who are manning these centers are also women. But also, uh, in the non state space, you're creating some very meaningful, uh, entrepreneurial opportunities for women, uh, to actually operate, uh, these centers. So just this one theme has fantastic power to actually make a difference. And uh, I think you and I have discussed this but it's a topic that's very close to my heart as well. Uh Karan, you've touched upon a few thematics which uh, uh, we very firmly believe in. Uh, uh, you mentioned about the need for financial inclusion and we do quite strongly believe that financial inclusion is a strong enabler for tackling some of the uh, development goals that the, that we have in front of us. You mentioned the need for aggregation and that's another area where uh, we completely agree with you that uh, we don't have the luxury to wait uh, for more pilots to happen before we start building scale. The time to scale is now. And you also touched upon how philanthropic capital uh, or concessional capital can have uh, different uses. You touched upon the need to measure uh, and evaluate impact that gets created through some of these projects. And that's another area where uh, because commercial capital may not sort of uh, see a benefit of doing that. Uh, but concession capital or philanthropic capital can actually play a very important role. And if zooming into from the macro into some micro. I mean if I were to sort of translate all of these for a specific uh transaction. Uh we at the Blint Finance company are very fortunate to be partnering with you and with UNDP India to design this uh, guarantee facility for climate smart and women led agriculture credit. Right. If one were to sort of just focus on this one transaction and look at how uh, some of what you just laid out translates into a transaction from your perspective. What are the key design principles or risk considerations that you really focused on uh when the transaction was being co designed uh by TBFC with you.

Speaker B: Yeah. So I think Neera. Right. I'd say here the you know agriculture is a really important and a big part of sort of UNDP's portfolio and of course area of focus and you know it's also a sector where the climate sort of risks are uh, perhaps even sort of repriced upward by lenders.

Speaker A: Right.

Speaker B: As we see the impacts of sort of climate change percolate and become much more visible. I mean just now, I mean I'm sitting in Delhi and I'm just thinking about. I was just having a conversation just the other day uh, on the fact that it's been raining cats and dogs for sort of three days. Uh, and we are in May.

Speaker A: Right.

Speaker B: So even just the fact that, and we were just talking about the impact of sort of these unseasonal uh, sort of rains and the impact that it has on uh, smallholder farmers. So I think in all of that the agriculture sector, uh, when it comes to sort of adaptation is a really important one. We are on the verge of sort of perhaps later this month seeing India's national adaptation plan, uh, coming out. Uh, and so this partnership between TBFC and UNDP on uh, climate smart and women led agricultural credit was a really sort of enticing opportunity to co create something uh, together. And perhaps the first sort of design principle was that we wanted this to be targeted at a very specific market failure. Right. So not something that's broad and generic, uh, when we are looking, let's say at agricultural credit more widely. So we are trying to design something that is very specific to in our minds, uh, women led sort of climate smart sort of investments or women led collectives.

Speaker A: Right.

Speaker B: And the second was how do we also look at this intervention as something that is perhaps potentially also piloting the emerging climate finance taxonomy that's being developed by the government of India. And the third for us was the sort of focus on key states. So whether it's Uttar, uh, Pradesh, whether it's Bihar or Odisha or Jharkhand or Madhya Pradesh states with sort of significant, you know, agricultural populations, states like, you know, the region at large with sort of high climate vulnerability, but also the large number of sort of women that are engaged in farming and in the agriculture sector. Uh, so how is it that we can actually come and support the development of a facility that potentially sort of builds greater familiarity for climate smart agriculture interventions and hopefully also reduces transaction costs in the process. One of the things that really appealed to us as well, or was the fact that this is not, and uh, I was trying to explain this actually to a colleague just the other day, that this is not a facility that is anchored with just a institution or sorry, just with one institution or with one lender specifically. We're looking to actually sort of have a number of these arrangements formalized. Uh, and that to me was also a pretty attractive way to actually go about a financing mechanism or an intervention. Because when you go with just one intermediary or you go with just one institution, they also have sort of limited reach. They also have their sort of area of influence or on ground sort of presence. So how is it that this can be done in rep replicated through sort of multiple layers and multiple transactions? And I think the fact that that was very much part of the design thinking right at the start was also a really attractive proposition for us.

Speaker A: You know Karan, you've touched upon something that's something that keeps me awake sometimes in the night. Uh, and that's because uh, you know before tbfc I was an asset manager myself and it's always uh, in some ways uh, more attractive to pool capital and then start deploying that capital. Uh because there is assurance that capital is available. One does not have to keep uh, sort uh, of hustling on a daily basis to get that capital in place. Uh, but at the same time the advantage of being in a transactional mode is exactly what you said, that once you have that template ready, you can keep adding uh, providers of capital and consumers of capital on an ongoing basis. And I think I uh, do believe that when we talk of scale and scaling of capital, this templatization where you have a facility structure more or less in place, which then makes it seamless for both the consumers and suppliers of capital to sort of come on board is quite ah, a powerful way I must say. And as you know, you know now we have two financial intermediaries who both uh, in some way signed up and committed some fairly significant sum of capital uh, for this uh, facility. So yeah, no, no, no, completely agree with you on that front. And by the way, just like your daily experience, I um, am in Surat at my parents place right now and we happen to uh, be on the road in the afternoon, my parents and I, in an air conditioned car. And yet it was absolutely unbearable given that my dad's car is a bit older. Therefore you know, the AC wasn't functioning at its best capacity. But even then, oh my God, I dread to think that there are people who are out there who are actually working in exposed environments in such heat. So first of all thank you very much for supporting our work on creating this uh, financing uh, facility and uh, very excited about uh, what comes out of it and be excited about the progress that we are uh, collectively making. Again, uh, Karan, uh, of zooming out a bit, uh, from the perspective of lessons learned, right, both institutionally but also personally, what would you identify as lessons that you've learned while driving sustainable finance initiatives? I mean you now are in a large multilateral and you also interact fairly closely with national government ecosystems. Are there any lessons that you'd like to share with our listeners so that they could keep the those in mind as they sort of venture out and create similar financing facilities of their own.

Speaker B: So maybe I'll sort of give one sort of institutional lesson that I've learned and maybe one sort of. So one professional and one personal, um, is that I think on the Sort of professional or the institutional side. I actually think that the hardest part on sustainable finance is actually not designing the instrument. It's not the structuring, I would dare say it's not even the sort of fundraising uh, around it. But in my view it's sort of building the political economy around it. So how is it that uh, when I sort of look at financing instruments I'm also always very conscious of, okay, a different set of sort of institutional interests that might exist, um, regulatory boundaries, national or ministerial sort of priorities which perhaps are not directly to do with an instrument but have a lot to do with sustainable finance at large. So I think how is it that we actually sort of navigate the political economy around uh, an issue is a, is a really important point, um, that we need to keep in mind. Particularly if I think as, as those that are, at least for us who are looking at it much more from a market building and uh, enabling environment perspective, that becomes really important. Which is why I also alluded to that example in the, in the Philippines earlier where you know, they have a sort of an institutional structure that brings together these different institutions. So I think that's, that's one. And we've certainly done that in India as well.

Speaker A: Right.

Speaker B: So we've done that. The mystery of finance had sort of launched a uh, sustainable finance collaborative. This was just after the pandemic. And that really helped to create ah, a shared agenda across different ministries. You know, whether it was on um, taxonomies, whether it was on um, climate risks and the financial system, whether it was on regulatory considerations for sustainable finance. So I think having all of those institutions there in the process, uh, was a really important and substantive sort of avenue to navigate and understand the different perspectives that are sort of coming in. All very valid perspectives. Uh, but just how is it that we can design and work towards sustainable finance, uh, in a way that uh, there is a uh, number of sort of institutions that are championing it. Right. So I think that that's perhaps one professional lesson I would say on the sort of personal side, and again in this context of course, is that how do we stay grounded in the actual sort of problem rather than a specific solution. Right. Uh, so rather than coming to every conversation with a prefixed solution in our mind, uh, potentially a solution that fits our organizational mandate or is something that perhaps has worked well uh, in another jurisdiction. So I think that that's a real temptation in this space and I've certainly been guilty of that for a while as well, where we almost sort of fall in Love with a particular instrument or a particular approach, and we start sort of applying and advocating for it, uh, in all sort of scenarios. Right. So the fact that, and the recognition that, you know, blended finance is not always the answer. Impact Bonds and Pay for Success is not the, the only answer, um, that exists. So how do we actually undertake, uh, a sort of a rigorous diagnosis of why capital is not flowing, really understanding what the specific failure or the issue is, and then follow that very disciplined approach of sort of problem first and solution second. This is much easier said than done, but I would, I would certainly say that these are uh, two sort of key learnings or two aspects that I still try and keep in mind.

Speaker A: Thank you for sharing those. Uh, Karan, that's uh, the, particularly the second part that you, uh, outlined around how does one remain loyal to the problem, not the solution. Something that uh, we try to remind ourselves of also at all points in time at the blended finance company. And uh, when we look at a problem, uh, very early on, we sort of decide whether blended finance is the answer. If not, then sort of that's not our problem to solve. It's an important one, but not one for us. But having said that, we still are guilty several times of uh, layering all solutions with uh, the Planet Finance lenses. So that's a very timely reminder for us as well. Uh, thank you for sharing that. Uh, and then, uh, from building on to the other point that you made around, uh, institutional adoption of uh, whatever that approach is and making sure that there is enough stakeholder buying at the highest level, including at the government level. If today there was one initiative, whether it's a policy or an instrument or a platform that you could champion. Right. Uh, from the perspective of the growth of broader development finance ecosystem in India. And I don't mean to put you on a spot, but if there was one, what would that be? But if you feel that, you know, it's difficult to isolate just one and perhaps there could be more than one, please, uh, share them with us.

Speaker B: Yeah, I'd say, like, if there's one sort of specific piece that I'd look to sort of champion or build on. For me, one of the sort of most promising periods was when we were working on this, uh, a sustainable finance task force that, that the Ministry of Finance had instituted, which was really just composed of different line departments and ministries at a sort of task force level. And then we had a number of sort of expert agencies and institutions that were coming in as part of the structure, but as part of different sort of working groups. And I really felt like, you know, that was an extremely effective sort of way to take the whole ecosystem along, you know, in one sort of direction but uh, also to sort of benefit from the best sort of expert minds and sort of technical expertise that is, that is available. So you know, having something similar even when it comes to blended finance, you know, a sort of a institutionalized, maybe some semi permanent or it doesn't even have to be permanent, a time bound sort of structure that really looks at how are we sort of looking at concessional capital, looking at guarantees, looking at how perhaps philanthropic resources can be deployed more effectively alongside private and commercial capital. I think all of that, you know, that agenda, uh, through a, uh, more institutional sort of national blended finance architecture, some, some sort would really be an initiative, uh, sort of, that I would certainly like to champion and I'm sure you would and many others, um, working in the space would, because I think that that's really needed and that really informs the sort of building blocks of this larger sort of ecosystem that we're trying to build.

Speaker A: No, completely agree with you uh, on this point Karan, about having some kind of a national blended finance architecture. You know, what that would allow us all to do is to be very clear about what the national priorities are. Uh, and then over time also discover things like leverage ratios that we should all aspire for because these have been discovered uh, through various transactions at the national level. But uh, Karan, since you have had the benefit of working closely with the governments, there's one place where I'm keen to maybe uh, seek some advice. You know, how would firms, private firms, non governmental organizations like the blended finance company work effectively with the governments? What is it that we need to do? How do we need to change our method of working so that we are better received by government entities and we're able to partner more effectively with the governments?

Speaker B: Yeah, I think uh, that's a really, really good question. I mean my first response is yes, we must work um, much more with undp. Uh, but um, I would say the one aspect that I, I think that we need to recognize is that when it comes to so working with government that there is a, you know, they have a sort of a different approach. Right. One that is actually quite consultative even within their respective sort of departments or ministries. Right. So it's usually not even if we are engaging with, let's say one individual at that department, they will through their own process want to secure a much larger sort of buy in, to move in a certain direction. I Often find that, I think working sometimes with uh, sort of private sector things like timelines and just a appreciation for that government process, uh, sometimes perhaps are uh, lacking. So I think that that is certainly one area, uh, that I think we just need to be mindful of. And the second is, is perhaps just, you know, the key sort of bit for me is that even when sort of engaging with government, there's so many sort of initiatives or reports and such great work that happens by institutions like TBFC and others, but just that whole process also sort of building capacities within government. Right. So to be able to sort of understand and grasp the issues and look at issues the way that perhaps you are sort of diagnosing, uh, a challenge or a problem, uh, which is perhaps much more analytical. But I also think that that whole piece of capacity building and really working closely with government over elongated periods of time, uh, I think that is certainly one sort of way to secure a seat at the table and to secure sort of a position of trust which so many institutions uh, now are sort of gaining and are uh, increasingly, increasingly visible. You know, your work in Maharashtra certainly being one of those examples, very valuable lessons indeed.

Speaker A: Karan, thank you so much for sharing them. I agree there's a lot that we at the private sector will also have to do, uh, to be effective partners, uh, of the government. This has been a fascinating conversation, I must say, but, uh, before I let you go, there's one thing I'm keen to know. This SDG gap of $4 trillion per year and increasing. Very easy to get frustrated, to give up. But what is it that keeps you optimistic? What is it that keeps you going? What is it that gives you hope that eventually we'll be able to find a way.

Speaker B: Yeah, I think honestly it's um, I would say that what gives one hope is actually the sort of people. Right. And I don't mean this as a, as a platitude, but really is something that I have experienced personally a number of times, which is that there are ah, so many sort of individuals within government and outside who are genuinely trying to uh, sort of figure out how to solve for a particular issue. You know, whether it's child care, whether it's bringing climate resilience in as part of their budgets or accounting for it. Um, I've seen sort of platforms develop, I've seen policies change, all of that by sort of looking at and working with um, with individuals. Right. And the fact that when I say that, oh, people, I actually mean that in a very specific way that whenever Things move in this ecosystem, there's almost always a champion, let's say, within government who's driving it. Right. So it's not even necessarily the larger institution, but it's coming down to a person, so someone who's really understanding both the development imperative, but also also the financial logic, who's willing to sort of navigate the internal political economy, um, and to sort of help build and sustain momentum over a period of time. Right. So I think that our job is, is really as development partners, is to find them, to support them and to really create the sort of conditions where, uh, they can succeed. And, you know, the sort of, in India's context, the country's sort of vision of Vixit Bharat, uh, can really be achieved. So I think that finding and supporting these individuals is perhaps the sort of key part, uh, and one that I continue to be very optimistic about.

Speaker A: Completely agree with you, Karan. It's end of the day, it's people, uh, that makes all the difference. It's not about institutions, it's not about processes. I mean, these things are of course important. But, um, eventually, in a field like ours, where so much is unprecedented, it's eventually the passion, the motivation and the energy of some individuals that indeed make, uh, the biggest difference. Thank you so much, uh, for joining us today.

Speaker B: Thank you, Neeru. An absolute pleasure to be here and

Speaker A: thank you listeners for joining us. Please let us know your thoughts and also the topics that you would like to see covered in future episodes. You'll find details in the podcast description on how to get in touch with us. Meanwhile, we will be back again next month with yet another stalwart of blended finance. Till then, here's me, Neerav and the team at the blended finance company signing off.