“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,” an official release said.
This type of bond lays down outcome-based targets to be achieved at the start of the contract. “This feature allows for tracking the progress of the outcomes, thus ensuring transparency for investors. This mechanism also ensures that funds are used effectively and efficiently towards the project. This SIB will support the PCMC in improving healthcare services for its citizens, especially with respect to the pandemic while incurring minimum investment risks,” the release said.
This is the first time that a government body will act as the ‘Outcome Funder’ in a bond, whereas traditionally most government-funded public projects require large and early investments by the government with a substantial gestation period of outcomes and involve various kinds of risks.
The introduction of the SIB will attract more investors from public and private sectors to fund public welfare projects and thus help to meet the investment deficit. The Palladium Group has been appointed for design and structuring expertise for the impact bond.
Sharing his insights, Shravan Hardikar, Commissioner, PCMC said, “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.”
PCMC is currently operating 30+ primary, secondary and tertiary level healthcare facilities with an aggregate 1,500-bed capacity. These facilities have been crucial in addressing the health crisis during the pandemic. 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.
Dr. Manish Pant, Chief, Health & Governance, UNDP India said on the occasion, “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.”
UNDP will support PCMC in the design of the SIB by providing technical assistance through the SDG Finance Facility housed at UNDP, a multi-stakeholder platform created to bolster the growth of SDG aligned innovative financing mechanism. The Facility is supported by the Swiss Agency for Development and Cooperation.