The Economic Survey of India, released earlier this week, looks at the impact of AI on the Indian economy. It’s largely a roundup, not a deep analysis of how specific industries will be affected. Still, there are a few points worth paying attention to.
At its core, AI enables automation. Industries with high elasticity tend to respond well to automation of all kinds, including AI. That’s a double-edged sword. Efficiency improves, which is clearly desirable. But employment opportunities shrink.
The Survey rightly flags two critical issues. First, India is now a services-led economy. That’s where automation will be most visible, most rapidly adopted, and most disruptive. Especially with AI, which can remove large parts of human intervention. Second, given our population size, the survey notes that India needs to create over 78 lakh jobs every year. Most jobs so far have come from services. But what happens when services themselves get automated? These two realities are in direct conflict.
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source: Economic Survey chapter 13 , January
The Survey notes that India cannot afford prolonged labour displacement- due to whatever reasons, adoption of AI included. I agree. This, in my view, is India’s biggest challenge. Not geopolitics. Not external threats. Our real test is whether we can productively employ millions of people. That’s what will ultimately determine how strong India becomes.
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