The Finance Ministry of India has underscored the significant challenge posed by the rise of Artificial Intelligence (AI) to governments worldwide, particularly in the realm of employment within service sectors. In a recent review of the Indian economy, released just ahead of the tabling of the Interim Budget on February 1, the Ministry highlighted the pressing questions surrounding AI’s implications for workforce dynamics.
Citing an International Monetary Fund (IMF) paper, the Ministry pointed out that approximately 40 per cent of global employment is susceptible to AI, with its potential benefits of complementarity juxtaposed against the risks of displacement. The paper further emphasised the necessity for developing economies to prioritise investments in infrastructure and digitally skilled labour forces to optimise AI’s potential benefits.
Despite India’s notable reform-driven growth trajectory over the past nine years, challenges persist. The nation’s economic outlook is no longer solely contingent on its domestic performance but is increasingly influenced by global developments and interdependencies.
As the global economy witnesses increased fragmentation and a slowdown in hyper-globalisation, India faces the ramifications of friend-shoring and onshoring practices, which are already impacting global trade and growth trajectories.
Furthermore, the intricate balance between energy security, economic growth, and the imperative of transitioning towards sustainable energy sources presents multifaceted challenges. Geopolitical, technological, fiscal, economic, and social dimensions all intersect, with policy actions in one country inevitably affecting others.
On the domestic front, the Finance Ministry underscores the critical importance of fostering a talented and skilled workforce, ensuring age-appropriate learning outcomes in educational institutions, and prioritising public health initiatives to cultivate a robust and productive populace.
Recognising that a healthy, educated, and skilled population is pivotal to driving economic productivity, the Finance Ministry stresses the need for concerted policy efforts in these areas in the years ahead.