The Challenge
Over the last two decades India has modernised its public finance system. PFMS, Direct Benefit Transfer and the Single Nodal Agency architecture have made fund flows cleaner and more predictable, while NITI Aayog’s Outcome Budgeting and the Output-Outcome Monitoring Framework have brought performance orientation into annual budgeting and review. Delivery can now take place at unprecedented scale. The next challenge is the qualityof what that scale delivers. More than 95 per cent of children aged 6 to 14 are in school, so the focus can shift to learning. PM-JAY reaches the bottom 40 per cent of the population, so the focus can shift to quality of care. Yet payments across schemes still largely follow inputs and process compliance: Skill India disburses a significant proportion against enrolment and certification milestones while placement rates have historically been low, PM-JAY pays a fixed rate per procedure irrespective of quality, and infrastructure funds are released at installation, so a tap connection counts as delivered the day it is installed.
Blended Finance in Action
This report translates India’s outcomes orientation into a practical framework for achieving national development targets at scale. Starting from the eight Viksit Bharat-aligned priorities, it identifies schemes where the preconditions for outcomes orientation already exist, meaningful fiscal scale, measurable outcome gaps, and credible data and coordination structures, and groups them into four pathways: government delivers, government procures, government reimburses, and government builds. It sets out five enablers for moving from pilots to standard practice, including a project pipeline, a central design and coordination unit, pooled catalytic capital, earmarked public funds for outcome pilots, and verification and knowledge infrastructure. It also examines the Urban Challenge Fund as an entry point for cities to embed outcomes orientation while mobilising commercial capital. Precedents already exist, from sovereign green bonds and performance-linked grants to the World Bank’s Pay-for-Results disbursements under STARS across six states, and the Skills Outcomes Fund announced by MSDE as India’s first outcomes fund with government funding. Throughout, the report positions government as the lead actor, with philanthropic capital underwriting risk, funding design support and supporting early outcome payments until evidence accumulates and government takes over.
