 "AI poses both risks and opportunities for youths, says Economic Survey")
The Economic Survey published on Monday cautioned on the advent of artificial intelligence (AI) and its impact on India’s economy. The Survey said AI poses both risks and opportunities for the young population in India.
“The advent of artificial intelligence casts a huge pall of uncertainty as to its impact on workers across all skill levels – low, semi and high. These will create barriers and hurdles to sustain high growth rates for India in the coming years and decades. Overcoming these requires a grand alliance of Union and state governments, and the private sector,” said the Survey report.
The Survey acknowledges that the world is in the midst of a fourth industrial revolution characterised by novel ways in which technology is becoming embedded within societies through “cyber-physical systems”, Internet of Things (IoT), big data, nano-technology, and networks. Against the backdrop of this evolving revolution, the future of job markets in India is undergoing a significant transformation, as is happening in the rest of the world.
The Survey puts the onus on the private sector to make sure that jobs are not replaced but reshaped. “In this milieu, the corporate sector has a responsibility, as much to itself as it is to society, to think harder about ways AI will augment labour rather than displace workers,” the Survey report said.
Pointing to a “Staff Discussion Note” of the International Monetary Fund (IMF) in June 2024, the Survey said generative AI will have profound impact on labour disruptions and inequality. “Employment is about dignity, self-worth, self-esteem, self-respect, and standing in the family and community, not just about the income it brings. That is why it is in the enlightened self-interest of the Indian corporate sector, swimming in excess profits, to take its responsibility to create jobs seriously,” said the Survey.
Chief economic advisor V Anantha Nageswaran, during his press conference, said: “The impact of AI is still not very well understood across the world. …therefore, it is necessary for the Indian corporate sector, both IT and non-IT sectors, to find the right balance between deployment of tech and deployment of labour, because without labour income and labour employment, there is no demand growth. So, they need to see this as a ‘win’.”
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The Survey said AI could lead to a slowing down of India’s services export growth, cutting it by 0.3-0.4 percentage points a year over the next decade.
It also pointed out that hiring in the IT sector has slowed significantly in the last two years. “We do not have a full picture of overall corporate hiring in the country on a regular basis. In any case, deploying capital-intensive and energy-intensive AI is probably one of the last things a growing, lower-middle-income economy needs,” said the Survey.
It also talks about how India should focus on other sectors to overcome the impact of AI. This includes focus on agriculture and other relatively less skill-dependent sectors.
“This only underscores the importance of the relatively less skill-dependent tourism sector for employment generation. Therefore, public policy should pay particular attention to boosting the tourism sector. Governments at all levels and the private sector must work together to realise the sector’s potential,” said the Survey.
It points out that trade protectionism, resource-hoarding, excess capacity and dumping, onshoring production and the advent of AI are narrowing the scope for countries to squeeze out growth from manufacturing and services. “That is forcing us to turn conventional wisdom on its head. Can the farm sector be the saviour? A return to roots, as it were, in terms of farming practices and policymaking, can generate higher value addition from agriculture, boost farmers’ income, create opportunities for food processing and exports, and make the farm sector both fashionable and productive for India’s urban youth,” added the Survey.
The Survey also acknowledges that India was one of the leading destinations for AI-related FDI in 2022, receiving 122 AI-linked FDI projects from multinationals like ABB, Accenture, Deloitte, IBM and Microsoft.
An IMF study has found that employment highly exposed to AI is 26 per cent for India, divided into 14 per cent for occupations with high complementarity and 12 per cent for those with low complementarity. Complementarity reflects lower risk of job displacement.