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AI in the Indian Economy
AI in the Indian Economy

April 15, 2024

AI

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The Indian economy is projected to grow at 7.5% in FY2024, which is remarkably higher than other major economies in the world, according to recently revised data by the World Bank. And AI has a major role to play in the fast progression of India. AI is not a new phenomenon. Much of its foundation has been built over the last ~75 years. Now, we are witnessing massive growth in advancements and adoption of AI, largely because of falling data storage costs and unlimited computing power. In this article, we’ll explore some instances of how AI is being leveraged for the growth and development of our nation.

Impact of AI on India’s GDP: It is difficult to assess the economic impact of AI because of the indirect effect that technology has on productivity. However, according to some studies, sectors such as finance, retail, education, healthcare, and business services are more likely (~69%) to have an impact. There’s a substantial opportunity for Gen AI in India, and EY forecasts that Gen AI could potentially add $359b–$438b to our GDP by 2030. This could bring an additional CAGR of approximately 1%.

India’s the 3rd largest talent pool for AI roles in the world and also hosts the 3rd largest startup ecosystem, highlighting the vast potential that India has for bringing about a revolution in AI. Therefore, India stands to gain more than other countries from labor-enhancing AI-enabled capabilities. Through reskilling and upskilling, training, and equipping workers in the domain of AI, the productivity of even an average employee can be leveled up, bringing the best out of them!

AI is being implemented across various sectors. For instance, enterprises are using it to optimize operations and improve customer services; banks are using it to assess the credibility of account holders and detect fraud; educational institutes are leveraging AI for better delivery of content and personalized learning experiences; and farmers are deploying AI to lower crop losses and maximize land productivity. Similarly, there are a plethora of use cases that make our lives easier.

However, there's also a downside to the increasing adoption of AI. AI is being labeled a ‘job eater’ by many because of its potential to automate tasks that don’t require much human intervention. It is a debate, but if it’s true, then AI could create inequality between capital and labor and within labor too, hence raising a public policy issue. And of course, there are challenges such as a lack of reliable data, privacy issues, and ethical concerns that require proactive steps.

To address this concern, the government of India has established various centers of excellence (CoEs) for AI at prestigious institutions. The government has also adopted PDPA for the protection of data. These initiatives are part of our vision for ‘Make AI in India’ and ‘Make AI Work for India’. The purpose is to encourage innovation, utilize AI in key sectors such as agriculture, healthcare, and education and make India a global leader in AI.

Key inputs from NITI Aayog, World Bank, EY.


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