We need inclusive capitalism that can help vulnerable people: Rajiv J Shah, President, Rockefeller Foundation

Rajiv J Shah was just 37 when the then US president Barack Obama handpicked him to lead the $20 billion United States Agency for International Development in 2009. During his five years at USAID, the foreign assistance agency earned praise for its work in earthquake-hit Haiti in 2010 and its efforts to contain the Ebola outbreak in West Africa in 2014. Once, while Shah’s team was setting up streetlights in Port-au-Prince (Haiti) in 2010, a woman and her daughter approached them. “They wanted to thank us. They were scared of spending the night in the street with no lighting. They felt protected, just with the light,” he recalls.

Then two years ago came his next big assignment: as the first Indian-American president of the 106-year-old Rockefeller Foundation, he was tasked with managing $200 million in annual grant budget to tackle health, food, power, and economic mobility issues globally. The foundation, active in India since 1913, has now partnered with Tata Power to install mini grids to supply power to more than 10,000 villages. “We can bring the cost down significantly… and we are sure low income customers will pay for reliable power,” says Shah in an interview with Shailesh Menon in Mumbai. Edited excerpts:

How has the Rockefeller Foundation’s work in India changed over the years?

Hundred years ago, we invested in solutions that eradicated hookworms and yellow fever. Then we started looking at broader public health and vaccinations.

After the Second World War, we invested in agricultural sciences and research. This, in a way, set the stage for the Green Revolution — which enabled India to feed itself.

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We continue to invest in the frontiers of science, technology and innovation, which could create advancements that help people be hopeful of their future. Health, food, power and jobs are the main areas we work in.

Do you still give out grants in India?

Our annual grant-making budget is $200 million globally. In the last 10 years, we have made grants and investments of nearly $81 million in India alone — making it the largest recipient country after the US.

How do grants or foreign aid help developing economies?

In many respects, India has seen tremendous progress. There has been a fairly consistent growth rate of 7% to 9% in the last 10-15 years. This has helped create a larger middle class, and reduced ‘official’ poverty significantly. That apart, India faces a real challenge in creating jobs and economic opportunities — particularly for rural and lower income communities. Lack of basic infrastructure and reliable access to power and energy are some of the reasons for that.

But the Donald Trump administration does not appear keen on American grants flowing to poor countries.

I can’t really speak to the thinking of the Trump administration. But I can say that, having led America’s foreign assistance work for quite some time, I saw first-hand how we are advancing both American interests and global interests when we provide support to those who are the least fortunate — whether sending eight million girls to school in Afghanistan or fighting a famine in Somalia, or addressing the lack of food and family planning in West Africa, or working with technology partners in India to create those frugal innovations that can help people all around the world. America, I think, is at its best when it’s trying to lift everybody up.

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But Trump says there is nothing in it [grants to poor nations] for America.

The returns on investment comes by way of greater national security. These grants help build economic connections that promote growth and trade and free movement of people and services.

They enable educational exchanges that broaden people’s horizons and create more understanding.


Trump’s argument is that these foreign grants could be used to solve America’s own problems of poverty.

Foreign grants flowing out of America are less than 1% of our federal budget. The number, often quoted by the current government, is much higher than what American foreign assistance actually is — which could be around $32 billion a year. This also includes humanitarian assistance given out, as also our investments in Afghanistan, where we give grants to create peace and security so that our troops come home safely.

Tell us about the foundation’s social impact investments.

Within impact, we are allowed to make debt or equity investments that are concessional in the hope of creating more progress.

What about investments in impact funds such as LeapFrog?

LeapFrog is just one of the many impact investing platforms we partner with. We just helped LeapFrog close its third $700 million fund. To date, LeapFrog has invested $170 million in India and claims to have touched the lives of more than 84 million Indians.

How popular is impact investing globally?

Catalytic or concessional capital is an area where we can unlock a lot of impact investing. And if you look globally, there is probably about $500 billion in investments labelled impact.

And that number doubles almost every year. Return expectations of social impact investors vary. So some family offices nurture return expectations that are either lower than or at par with commercial investments. Development finance institutions might seek a more measurable impact and have a lower cost of capital in that context.

You also run an impact investment portfolio management vertical. Have you approached wealthy Indians?

We talked to a lot of partners here, and some very wealthy Indian families want to coinvest with us in high-quality impact projects.

We need capitalism that can be more inclusive and help vulnerable people lift themselves up. Look around the world and you see so many major economies struggling with inequities and inequalities. In the US, in the last 60 years, we have become a more unequal society with levels of inequality far higher today.

Even in India, we see a similar trend. Parts of Europe have also been struck by the same trend.



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