The Economic Survey on Monday highlighted the adverse impact that artificial intelligence can cast on Inda’s working class which in turn can add to the barriers to sustained growth for the Indian economy.
The survey, presented by finance minister Nirmala Sitharaman in the Lok Sabha. puts the spotlight on the private sector to come up with ways to augment labour with the help of AI rather than displace jobs.
“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,” the survey said, noting it as one of the potential shocks that can further structurally impair employment generation and create barriers and hurdles to sustained high growth rates for India in the coming years and decades.
The other shocks can be climate change and global warming, the survey said, while also noting the larger shocks that came from high corporate indebtedness and the Covid pandemic which had throttled job creation.
The Economic Survey also noted that, with artificial intelligence impacting several areas of economic activity, the labour market will need to adapt and steer technological choices towards collective welfare.
“Overcoming these requires a grand alliance of union and state governments and the private sector,” the survey highlighted. “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,” it added.
In his comments at the press conference, chief economic advisor V. Anantha Nageswaran said that India needed to create about 8 million jobs every year and in that context corporate India had to make sure that the deployment of technology does not hurt the labor share of income and the capital share of income. This, he said, was a medium-term challenge.
“India may have a slight short term negative impact followed by a medium term positive impact, therefore it is necessary for the Indian corporate sector both information technology and all IT sector to find the right balance between deployment of technology and deployment of labour because without labour income and without labor employment, that is no demand growth, which means it comes back to hurt the country's top line and bottom line as well,” he said.
Pointing to findings from the Staff Discussion Note of the International Monetary Fund published in June 2024 that talk of profound concerns stemming from Generative Artificial Intelligence or GenAI’s impact on massive labour disruptions and inequality, the survey said that it would be in the ‘self interest’ of corporate India to seriously create jobs even as they invest in AI across sectors.
“... 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. Of course, it must find people with the right attitude and skills,” it added.
The survey states that AI is likely to limit growth opportunities for business services, which could pose a major challenge to job creation and the long-term sustainability of India's services sector. It states well-functioning cities are needed for the growth of services, especially those with more global market potential.
Flagging the significantly low hiring in the IT sector in the last two years and an unclear picture of overall corporate hiring on a regular basis, the survey cautioned against blind deployment of capital and energy-intensive AI, which will, in turn, hurt job creation.
“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,” it added.
Terming technology as an emerging biggest strategic differentiator which was also determining the economic prosperity of nations, the survey admitted that AI had immense productivity enhancing potential but its social impact via labour market disruptions and labour displacement was not yet understood. “It also has the potential to skew the capital and labour shares of income in favour of the former,” it noted.
