Economic Survey 2024-25 Highlights AI's Impact on India's Job Market and Economy

AI's Potential Impact on India's Job Market

The Economic Survey 2024-25 has highlighted the significant potential impact of artificial intelligence (AI) on India's job market and economy. The survey warns of possible mass unemployment due to AI, particularly in sectors such as customer service, creative industries, education, and healthcare 1

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. According to an IIM Ahmedabad survey, 68% of white-collar workers expect their jobs to be partially or fully automated by AI within the next five years 2

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Historical Context and Lessons

Drawing parallels with previous technological revolutions, the survey notes that such transitions often led to long-lasting damage as labor was substituted by capital. Workers struggled to find new employment, income inequality rose, and those unable to adapt faced declining pay and fewer opportunities 1

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. The report emphasizes that India, as a labor-surplus country, cannot afford protracted labor displacement 1

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AI Adoption Across Sectors

Despite concerns, the survey also highlights the rapid adoption of AI across various sectors in India:

1. Banking and Finance: AI is enhancing customer experiences, operational efficiency, and fraud detection. For instance, the State Bank of India uses an AI chatbot for customer assistance 3

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2. Telecom: AI-driven platforms are optimizing networks and predicting maintenance needs 3

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3. Retail: Personalized marketing and smart inventory management are being implemented using AI 3

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4. Logistics: AI algorithms are streamlining operations through route optimization and robotic systems in fulfillment centers 3

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Mitigating Risks and Leveraging Opportunities

To address the challenges posed by AI, the survey proposes several strategies:

1. Strong Institution Building: The report calls for the development of three types of institutions 1

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   • Enabling institutions: To impart new training and skills to workers.
   • Insuring institutions: To provide a safety net for affected workers.
   • Stewarding institutions: To balance public welfare with innovation.

2. Collaborative Approach: The survey advocates for a tripartite compact between the state, private sector, and academia to ensure inclusive distribution of AI-driven productivity gains 1

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3. Education and Workforce Skilling: Significant investments in education and workforce development are necessary to prepare for AI-driven changes 2

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4. Corporate Social Responsibility: Companies are urged to introduce AI gradually and sensitively to reduce the burden on policymakers and state resources 1

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India's Unique Position

The survey argues that India is well-positioned to benefit from the AI revolution due to its young workforce, which is likely to adapt well to AI-driven changes 1

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. However, the country must prioritize capacity and institution building to fully leverage these opportunities 1

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Challenges and Concerns

Despite the potential benefits, anxieties about AI's impact on jobs remain high in India. The survey cites concerns about the services-led nature of India's economy and the potential for job losses in low-value-added IT services, which are prime candidates for automation 1

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. Global trends, such as potential job cuts in the banking sector due to AI, further underscore these concerns 2

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As AI continues to reshape India's economic landscape, the Economic Survey 2024-25 emphasizes the need for proactive measures to ensure that technological progress translates into inclusive growth and societal benefits.