Rising demand for socially responsible and purpose-driven finance has resulted in new ways of putting capital to work the world over. In the past decade, what is now known as “impact investing” has challenged the long-held view that social returns should be funded by philanthropy and financial returns should be funded by mainstream investors.

The global market for impact investments is projected to grow to $300 billion or more by 2020,1according to the Global Steering Group on Impact Investment. Although this is still a fraction of the total private-equity assets under management (about $2.5 trillion in 20162), mainstream investors have entered the arena and are bringing scale to what was earlier considered a niche. And the dialogue is shifting rapidly from impact investing to “investing for impact.”

India is fast becoming a test bed for many of these activities. Between 2010 and 2016, India attracted over 50 active impact investors, who poured in more than $5.2 billion. About $1.1 billion was invested in 2016 alone. This article, based on our new report, Impact investing: Purpose-driven finance finds its place in India, looks at recent developments in the country and debunks some myths that have long surrounded these investments.

Impact investing can be a vehicle to fund, catalyze, and scale approaches that improve millions of lives. India is emerging as an attractive market for this type of investing. High demand for investments is likely to continue as a result of the growing population, underlying economic growth, stable financial markets with a strong rule of law, and large unmet social needs.

Cumulative investment in impact investments in India since 2010 has been $5.2 billion. In many ways, 2015 was a turning point, as investments crossed $1 billion (Exhibit 1). Much of the growth has come from a doubling or more of average deal size, which rose to $17.6 million in 2016, from $7.6 million in 2010. The volume of deals has remained stable, at about 60 to 80 a year, demonstrating the emphasis on scaling new models of impact.

Read more: Impact investing finds its place in India | McKinsey & Company