Economic study highlights impact of AI on Indian job market
The recent economic survey 2023-24 indicates: “The biggest disruption to the future of work is the accelerating growth of AI, which is poised to revolutionise the global economy. India will not remain immune to this transformation. AI is recognised as a general-purpose technology, like electricity and the internet, which is phenomenal in its rapid pace of innovation and ease of diffusion. As AI systems continue to get smarter and their adoption increases, the future of work will be reshaped. While AI has considerable potential to boost productivity, it also has the potential to disrupt employment in certain sectors. Routine tasks, including customer service, are likely to see a high degree of automation; creative sectors will see extensive use of AI tools for image and video creation; personalised AI tutors may reshape education; and sectors like healthcare may see accelerated drug discovery.”
How the Economic Survey Advises the Government to Tackle This AI ‘Problem’
The investigation reveals: “India, with its huge demographic dividend and very young population, is in a unique situation as AI presents both risks and opportunities. According to Capital Economics (2024), the current diffusion and adaptation of AI in India remains low compared to the US, Europe and developed Asian economies. The manufacturing sector is less exposed to AI as industrial robots are neither as agile nor as cost-effective as human labour. In inventory and supply chain management, AI applications could instead be complementary to labour.
The business process outsourcing (BPO) sector is particularly at risk. GenAI is revolutionizing the performance of routine cognitive tasks through chatbots. Employment in this sector is expected to decline significantly over the next ten years. However, over the next decade, the gradual diffusion of AI is expected to increase productivity. Using AI to identify health risks from digitized medical data, predict the weather, and complement teachers in grading tests and translating texts are some of the development gaps that AI can fill.
The widespread adoption of AI in the service sector has the potential to significantly reshape and even
replace jobs. Based on job posting data from India’s largest job website, Copestake, A. et al.
(2023) interpret a near exponential increase in demand for AI-related skills since 2016.
They find that the demand for AI skills by companies has a negative impact on the need for non-AI positions and on the top percentile of salaries, due to the displacement of highly skilled management positions and non-routine intellectual tasks.
Given the affinity of the Indian population to work with technology, as evidenced by the digital
public infrastructure, proactive government and industry interventions can position
India is a key player in the era of AI. Employees or job seekers will need skills beyond
communication, collaboration and presentation, such as analytical thinking and innovation, complex problem solving, critical thinking, learning and personal development, technology design
and programming; as well as resilience and adaptability, to face the challenge of AI.
AI has seen significant growth in the agri-tech, industrial and automotive, healthcare,
BFSI and Retail sectors in India. One of the significant examples is Praman Exchange,
the world’s largest horticulture exchange, powered by Intello Labs that uses computer vision to map the quality of horticultural products. Pramaan’s technology enables quality assessment
with 95% accuracy, surpassing the 70% manual assessment rate. This gives entrepreneurs the time and flexibility to trade from anywhere in the world.
The government has launched several initiatives to ensure an AI-based ecosystem and
to connect AI to the country’s youth. These initiatives include ‘Future Skills Prime’, ‘YUVAi:
Youth for Unnati and Vikas with AI’, a national programme for school students and ‘Responsible
AI for Youth 2022-45. A budget of Rs 10,300 crore has been earmarked in 2024 for AI in India
Mission, a significant step forward to strengthen the AI ecosystem.
