Blended finance in India: A strategic update

The UN Financing for Development conference offers a pivotal platform to reimagine blended finance for the decade ahead

- KARTIKEYA N DESAI

As the world's finance ministers, business leaders, fund managers, and foundations convene in Spain for the fourth UN Conference on Financing for Development (FFD), a harsh reality looms large: We are alarmingly off-track, to the tune of $4 trillion, to meet the sustainable development goals (SDGs). Official development assistance (ODA) has been stagnant, and there have been body blows like the reduction by about 80 per cent of the American ODA budget, and the recent withdrawal by the Trump administration from the FFD4 process itself. In this environment, mobilising private capital at scale is essential to achieve the SDGs.

This is where blended finance, which leverages scarce public or philanthropic capital to crowd in private funding, has emerged as a key lever. It involves the strategic use of concessional or catalytic capital to correct for market failures, de-risk private investments, and drive commercial funding into areas like climate, health, education, and gender equality.

The theory is compelling. And there have been real wins—the global blended finance market has mobilised over $250 billion for emerging markets, with Asia accounting for over 40 per cent of deals, according to Convergence. India stands out as one of the top three markets, with over $15 billion mobilised across 130-plus transactions over the last 10 years.

Yet, despite the promise, blended finance is at a crossroads—and several voices have raised pointed critiques on each of its three core pillars: Impact, leverage, and returns.