AI offers India big opportunities to boost jobs, living standards: World Bank MD Paschal Donohoe

The global economy continues to show resilience despite fresh energy and supply-chain shocks, with growth and job creation remaining firm across many regions, World Bank managing director and chief knowledge officer Paschal Donohoe tells Deepshikha Sikarwar. The former Irish finance minister, who was on a visit here, believes artificial intelligence (AI) could be a powerful opportunity for emerging economies, particularly India, to lift productivity, jobs and living standards.

Edited excerpts:

The West Asia crisis exposed the global economy to energy and supply chain shocks. How do you see the world economy going ahead with a durable resolution to the conflict still not in sight?

We see the global economy still growing, but at a slower pace than it otherwise would have. And we see the impact that is having, particularly at a regional level. Overall, the global economy continues to show resilience. The fact that many economies across the world are still growing in the face of another economic shock is proof of that resilience and of the reforms that national economies have put in place. From the World Bank Group’s point of view, our role is not just diagnosis. It is about the positive role we can play in assisting economies, building resilience and helping them deal with the latest economic shocks.

That is why president Banga (World Bank president Ajay Banga) has put jobs at the very heart of the work of the World Bank Group. Jobs are essential to rebuilding the growth potential of the global economy, but they are also an important contribution to building resilience at a time when shocks are becoming more frequent. So, it is still a story of growth and job creation in many parts of the world. But it underlines the importance of the jobs agenda and its role in national economic resilience.

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The World Development Report estimates that only 4.5% of existing jobs in developing economies are at risk compared with 14.2% in high-income countries due to AI. One of the key concerns with regard to AI for a country like India is impact on jobs….I understand why that apprehension is there, particularly where young people are concerned as they look to enter the labour market and get their first job. This is why, within the World Bank, jobs are at the very centre of our policy mandate.

We have identified five sectors where we believe continued job growth is possible even as the use of AI expands: manufacturing, healthcare, tourism, farming and food. These are sectors that are likely to be resilient to technological changes, while still offering significant job-creation potential. Our World Development Report acknowledges the concerns around job creation and retention, but puts forward a framework around advance, adopt and adapt.

Some economies will focus on advance AI. But there is great potential for others to adopt and adapt these technologies. Adaptation means making large AI models more appropriate through the use of local content. In India, for example, local culture, language and law need to be reflected in these models.

And adoption reminds us of a great lesson from technological change: it is not just about who creates the technology, but how it is used and how widely it diffuses. In India, we believe there is enormous potential for AI to play a positive role because of the advances already made in digital infrastructure.

Could India’s demographic dividend actually become a vulnerability if AI reduces the demand for large pools of relatively low-cost skilled labour?

I see more opportunities, actually. I look at the use of, for example, large language models already taking place in India and the appetite young people have, as well as the skills they have developed in the digital economy. While I absolutely acknowledge the concerns, I would still make the point that the opportunities for India from AI, and the effect it could have on jobs and living standards, are very significant and positive.

I only have to go back to what we saw in Uttar Pradesh during my visit. We saw AI being used by farmers to provide better expertise on crops, understand how they could get better prices for their produce and access information on weather. We also met a young woman farmer who had used AI to analyse a leaf and identify the pest damaging her crop, and therefore determine the appropriate response.

For a small farmer, being able to identify the right response to a pest using AI is a very positive development. India is at the global frontier in identifying ways in which this can be done.

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India wants to build domestic AI capability while also using foreign frontier models. What should India bet on frontier models, skills or applications?

The Indian government has already identified many of the appropriate policy choices, and our goal is to be a good partner in those choices. Our advice is focused on including adoption and adaptation. The potential is particularly large in areas such as farming. We can see work underway to put voice-activated AI in the appropriate local languages, allowing small farmers to access the best advice available. That is something the Indian government is already pursuing. Our objective is to be a good partner in scaling these efforts across India. Through our new five-year policy agreement with the government of India, we want to help make these initiatives a reality.

If a small number of economies control the critical layers of the AI value chain, can AI make the global economy more geopolitically fragmented and is there a risk of widening inequality?

We would argue for the benefits in allowing other countries to mobilise the resources that are needed to develop these models. We acknowledge and are aware of the concerns that different countries have in relation to inclusive growth and the effect that it could have on inequality within economies

It (geopolitical fragmentation impact) is very much a debate for countries themselves to have. We are an institution in which all those countries are shareholders, and very constructive supporters of the World Bank. Our role is to help countries respond back to the technological revolution that’s underway and to help them make choices that are positive for them and help allay concerns. Our research shows there are significant benefits for countries in focusing on the use of existing models rather than incurring the enormous costs of developing them or trying to catch up with the technological frontier.

Do you see a need for a more robust global framework or common standards for AI, given the risks associated with the technology?

We believe there is an important role for global standards in relation to AI because those can make a contribution to inclusive use of AI across the world. Our role within the World Bank is to see how we can partner with emerging and developing economies to help them participate in that debate and process.

At the national level, our role is to help countries develop the capacity to establish appropriate standards and regulatory frameworks. India, given its scale and expertise, is already well advanced in what right regulation is needed, what governance is needed to look at issues such as data ownership, data portability and governance. For smaller and medium-sized economies, the World Bank can provide the policy advice and support needed to develop appropriate regulation and governance. There are many economies for whom AI offers great potential, but their governments need assistance in determining the right framework for that potential to be realised.