Demystifying Results-Based Financing
The concept of Results-Based Financing (RBF) has been garnering significant attention in the international development landscape. In the Union Budget for FY 2023-24, the Finance Minister of India, Nirmala Sitharaman, delved
into the need for RBF in allocating “scarce resources for competing development needs”, especially in sectors such as education and healthcare. RBF, also known as innovative financing, pay-for-success, or outcome-based payment, is an umbrella term referring to any intervention that provides rewards to individuals or institutions after agreed-upon results are achieved and independently verified. Common forms of RBF include Social Impact Bonds (SIB), Development Impact Bonds (DIB), Conditional Cash Transfers (CCT), and Outcome-Linked Interest Rate Loans. As a concept, this is not new to India. Back in 2015, the Swachh Bharat Mission was a large-scale performance-based programme
, in which states were given incentives for meeting certain performance standards set around the reduction and sustenance of an open defecation-free environment and improved waste management in rural areas. In the education sector, this concept of financing can potentially deliver better value for money.
Back in 2015, the Swachh Bharat Mission was a large-scale performance-based programme, in which states were given incentives for meeting certain performance standards set around the reduction and sustenance of an open defecation-free environment and improved waste management in rural areas.
Ensuring every rupee delivers real learning
Although remote learning took center stage during the pandemic, the conventional idea of offline education is still widely salient. Blended learning—a mix of offline and online learning—offers an optimal way forward to recover the pandemic-induced learning loss amongst students. Therefore, there has been a clear thrust on digital models in education, whether it is the creation of a National Digital Education Architecture (NDEAR)
or efforts around setting up a National Digital Library
for children in the recently announced budget. A blended-learning approach weaves in the use of gadgets and online tools that expand horizons but they also keep in mind the practicality of the neighbourhood brick-and-mortar classrooms where children show up to learn.
Within this context of a growing ed-tech ecosystem, we need to ensure that such large-scale ed-tech initiatives in public schools drive sustainable results and achieve real returns on every rupee spent. Traditionally, ed-tech programmes in government schools have focused on the delivery of input parameters, such as the deployment of hardware, installation of software, and completion of teacher training activities, as opposed to focusing on outcomes and impact achieved through regular usage of this infrastructure that would yield better learning outcomes.
In 2014, an analysis undertaken by the National Council of Educational Research and Training (NCERT)
in Tamil Nadu, West Bengal, Uttar Pradesh, Himachal Pradesh, Punjab and Chandigarh, Assam, Meghalaya, Mizoram, and Sikkim of the 2004 scheme titled ‘ICT@Schools’ revealed a grim picture. It showed that although 70-80 percent of the computers were functional at the time of the inspection, issues pertaining to the availability of ICT curriculum and supporting infrastructure such as electricity, internet, and projectors were reported in some states, leading to limiting relevant usage of ICT resources.
Blended learning—a mix of offline and online learning—offers an optimal way forward to recover the pandemic-induced learning loss amongst students.
A significant amount of taxpayers’ money spent on ICT in education continues to deliver a very limited impact on learning outcomes. In light of the above limitations, the Rajasthan government embarked on a project called “Mission Buniyaad”, which aims at enabling digital learning in schools that covers even the remotest corners of the state. The government wishes to iron out operational challenges around access and usage to significantly improve the utilisation of existing ICT infrastructure with a clear focus on improving learning outcomes. It aims to provide high-quality Personalized Adaptive Learning (PAL) content that would aid in the improvement of learning levels in the state.
While such post-facto interventions are definitely needed across states, some of the looming questions are:
- How can large-scale ed-tech programmes be designed that set accountability of key stakeholders (service providers, government officials, teachers, etc.) at the core of it, resulting in better utilisation of ICT resources from the onset and subsequent improvement in learning outcomes?
- How can efficiency be embedded in current ed-tech financing models to yield improved learning outcomes?
At the intersection of these two large-scale questions lies this precise financial approach of RBF. As per the Government Outcomes Lab
at the University of Oxford, globally 276 such instruments have been contracted across eight sectors with India spearheading this approach across education, health, and skilling.
NITI Aayog is piloting an accountability-based ed-tech procurement
NITI Aayog is piloting a new approach towards responsible procurement of ed-tech in public schools. In association with Dell Foundation and GDi Partners, it is spearheading the design and implementation of a Results Based Financing Personalized Adaptive Learning (PAL) programme
by ConveGenius, the selected service provider, in four Aspirational Districts in Uttar Pradesh—Balrampur, Fatehpur, Chandauli, and Sonbhadra across 280 public schools. While RBF instruments have been piloted in India earlier in the form of Development Impact Bonds (DIBs) to create evidence and spearhead innovation, this initiative is the first of its kind in India, where a government body is the “outcome funder”. Envisioned as a first of its kind in many ways, this programme aims to reimagine ed-tech procurement in India by linking a part of the payment of ed-tech service providers to actual improvement in learning outcomes of children that will be verified by the Centre for Science of Student Learning—an independent third-party evaluator. It is a classical live example of “buying results”, rather than “buying inputs”.
Traditional procurement practices in India aim to procure ICT hardware to maximise coverage in schools with the intent of its use by students to improve learning, but the desired outcome of improvement in learning levels is seldom reported, and in reality, rarely met. And quite often, the lowest-cost hardware that meets the technical and financial criteria (L1 bid) is selected with little focus on quality of software and content
Traditional procurement practices in India aim to procure ICT hardware to maximise coverage in schools with the intent of its use by students to improve learning, but the desired outcome of improvement in learning levels is seldom reported, and in reality, rarely met.
In reimagining this procurement practice, NITI Aayog has taken the revolutionary step of spearheading a unique model for ed-tech procurement within governments in 2022. The Request for Proposal (RFP) by these districts to onboard a suitable EdTech provider clearly outlined targeted improvement in learning levels over two years and linked 50 percent of providers’ payment to these learning improvement targets. The roles and responsibilities of service providers were classified under three buckets—hardware, software, and field support. Also, with a more comprehensive technical evaluation system in the form of a quality-and-cost-based selection (80 percent weightage to technical criteria and 20 percent to cost criteria) bidding process, the emphasis on quality of content and software, pedagogical alignment with state curriculum, the experience of the service provider, availability of data and analytics was much stronger.
This ambitious programme by NITI Aayog aims to establish a blueprint for an innovative outcomes-linked procurement model in India’s ed-tech ecosystem and fund the accomplishment of results rather than merely the efforts to accomplish those results. With the periodic tracking of various aspects of learning levels of students and usage of the ed-tech labs, the onus of driving outcomes now lies predominantly with the provider. This model incentivises the provider to take proactive steps to improve the learning levels of students, including engaging officials through data-driven reviews at the district, block, and school levels, providing regular training to teachers on technical and academic aspects and maintaining ICT infrastructure in a usable condition. This approach not only improves accountability of service providers towards actual learning but also helps in moving the needle from input parameters such as installation of labs with no subsequent usage to a sharper focus on improvement in learning outcomes for students.
The road ahead
The optimism around the potential of ed-tech and large-scale ICT initiatives is here to stay and while the need for new resources and reforms cannot be discounted, there is a greater imperative to ensure that every rupee spent by the government on existing ed-tech initiatives delivers real outcomes i.e., improvement in children’s learning levels. As the 2030 target to achieve the UN’s Sustainable Development Goals (SDGs) dawns upon us and the capital allocation towards these goals remains inadequate, reimagining traditional public financing and procurement practices through RBFs could, indeed, go a long way in moving the needle from inputs to outcomes.
With the periodic tracking of various aspects of learning levels of students and usage of the ed-tech labs, the onus of driving outcomes now lies predominantly with the provider.
RBF is still in a nascent stage in India and challenges around the lack of ample evidence of success stories, lack of accountability mechanisms, perverse incentives, regulatory challenges, measurement and attribution of impact, complexity in structuring, etc. continue to exist. While RBF-like instruments should certainly not be seen as a panacea for all challenges faced in achieving development outcomes, it aims to create a more accountable system and ensure better value for money, if designed appropriately. With NITI Aayog leading the way for the government to act as an outcome funder, the success of this programme can build confidence in innovative financing approaches beyond ed-tech and attract additional government and private investments for similar initiatives in the future by demonstrating measurable impact and success.
Mohit Bahri is a Co-Founder at GDi Partners and has played a key role in the design and implementation of the Outcome Based Ed-Tech programme
Shraddha Iyer is a development sector professional with prior experience in strategy and program implementation across areas such as education, gender equality, innovative financing, and CSR.
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