Chief Economic Advisor V Anantha Nageswaran highlighted the important and positive impact of artificial intelligence (AI) on India’s population and workforce, on the sidelines of the Economic Survey 2023-24, tabled in Parliament a day before the presentation of Union Budget 2024.
He mentioned that within the next decade, India is set to become the world’s third-largest economy and will greatly benefit from its young population.
However, Nageswaran also recognised potential challenges posed by AI, especially for India’s Business Process Outsourcing (BPO) sector.
“The short-term challenge of generative AI could slow BPO sector growth, affecting customer services. It is possible that the jobs related to BPO will be under threat whereas AI may actually turn out to be a booster,” he said.
Nageswaran also noted that AI might reduce annual productivity growth by about 0.3 percentage points in the coming years, indicating a possible short-term dip as industries adjust to new technologies.
Despite these challenges, he said AI’s long-term potential is promising. Wider use of AI could greatly improve important areas like healthcare and education, enhancing human capital.
The economic survey presented in Parliament by finance minister Nirmala Sitharaman states that the Indian economy can grow at a rate of 7 per cent in the medium term.
“In the medium term, the Indian economy can grow at a rate of 7 per cent plus on a sustained basis if we build on the structural reforms undertaken over the last decade. This requires a tripartite compact between the Union Government, State Governments and the private sector,” the survey stated.
“To maintain a growth rate of over 7 per cent, the Union Government, State Governments, and the private sector must work together. India’s financial sector is experiencing significant changes,” the report stated.
In FY24, primary capital markets helped raise ₹10.9 lakh crore, making up about 29 per cent of the gross fixed capital formation for private and public companies in FY23, the survey added.
“Additionally, India faces a unique mix of opportunities and challenges due to global trends like geo-economic fragmentation, the push for self-reliance, climate change, the rise of technology, and limited policy options,” the economic survey report stated.