The Economic Survey 2024-2025, presented by Finance Minister Nirmala Sitharaman, emphasizes the profound implications Artificial Intelligence (AI) could have on the labor market, especially for middle- and lower-income workers. As AI continues to advance and automate tasks across industries, it poses risks of large-scale displacement in jobs traditionally held by these groups.
AI’s Promise and Its Disruptive Consequences
AI is poised to revolutionize various sectors, including healthcare, education, finance, and research. Developers promise that AI will automate tasks, making decision-making faster and more efficient across these industries. However, the Economic Survey expresses concern that AI’s capabilities in surpassing human performance could lead to widespread job losses, particularly in middle and lower-tier wage sectors.
The survey draws parallels to previous industrial and technological revolutions, which have historically resulted in economic hardships, prolonged unemployment, and widening income inequalities. Former Chief Economist of the Bank of England, Andrew Haldane, notes that past revolutions were “painful,” and AI’s adoption could be no different, affecting millions of workers who may find their roles automated.
Vulnerable Sectors and the Need for Caution
India’s service-oriented economy, with a large portion of the IT workforce engaged in low-value-added tasks, is particularly vulnerable to AI disruption. In these areas, automation could replace human labor to lower costs, making these workers highly susceptible to job displacement.
The government is urged to prioritize the creation of new social infrastructure, enabling workers to transition into higher-skilled roles where AI can assist rather than replace them. This requires a collaborative effort from the government, private sector, and academia. These institutions must work together to ensure inclusive growth and reduce the negative consequences of automation.
Preparing for the Future of Work
The survey advocates for building “enabling,” “insuring,” and “stewarding” institutions to support the transition of workers towards more specialized roles. While the task is resource-intensive and time-consuming, India is currently in a position to prepare for these changes. The AI technology is still in its early stages, and India has time to strengthen its foundations and develop a nationwide response to AI adoption.
Challenges and Opportunities for India
Despite the potential for AI to improve efficiency, there are significant challenges. AI developers must address issues of practicality, reliability, and the infrastructure required for widespread adoption. These hurdles may delay full-scale implementation, giving India the necessary window of opportunity to act and prepare its workforce.
India’s young, dynamic, and tech-savvy population is an asset in navigating these challenges. By focusing on improving the quality of the workforce, India has the potential to harness AI to augment human labor, increasing productivity across various industries.
Augmented Intelligence: The Future of Work
History shows that when labor and technology are carefully integrated, automation can lead to a rise in the employment-to-population ratio, as seen throughout the 20th century. The future of work will likely involve augmented intelligence, where human and machine capabilities complement each other, enhancing human potential and improving job performance.
For AI adoption to be successful, policymakers must balance technological innovation with the societal costs it may incur. The corporate sector also has a responsibility to adopt AI sensitively, keeping in mind India’s unique challenges. A joint effort between the government, private sector, and academic institutions is essential for minimizing the negative societal effects of AI and ensuring inclusive growth.
Conclusion
The Economic Survey 2024-2025 underscores the importance of preparing for the disruption AI could cause to the labor market. Policymakers, businesses, and educational institutions must collaborate to build a future where AI enhances human capabilities, rather than replacing them. With proactive planning, India can navigate the challenges of AI and position itself for a future of augmented intelligence and inclusive growth.
