New Delhi: The Economic Survey on Friday said regulatory frameworks will need to be “revisited and amended” to ensure that use of AI aligns with societal values, balancing innovation with accountability and transparency.
The pre-Budget document cited an IMF paper to say that governments may be forced to tax incremental profit of corporates that use AI to replace labour.
With an entire chapter dedicated to ‘Labour in the AI era’, the Economic Survey noted that while impact of AI on labour will be felt across the world, the problem is magnified for India, given its size and its relatively low per capita income.
“If companies do not optimise the introduction of AI over a longer horizon and do not handle it with sensitivity, the demand for policy intervention and the demand on fiscal resources to compensate will be irresistible,” it said.
The state, in turn, has to resort to taxation of profits generated from the replacement of labour with technology to mobilise those resources, as the IMF suggested in its paper, it noted.
“It will leave everyone worse off and the country’s growth potential will suffer, as a result,” the Survey warned.
Structural changes to how children are educated will be required in addition to safety nets that can shield existing workers from economic and social fallouts, said the pre-Budget document that details the state of the economy over the current fiscal year.
Utilising the window of time available during the nascent stages of AI to build robust institutions can ensure that the nation is well placed to minimise the costs as much as possible, it observed.
“This can then help tilt the scale towards the benefits, bringing a balance to the ‘cost-benefit’ aspect in a labour-driven, services-dependent economy like India,” it said.
Navigating this transformation necessitates coordinated participation from all agents of the economy, according to the survey.
“A tripartite compact between the government, private sector and academia can ensure that the gains from AI-driven productivity are widely distributed, taking us in the direction of the ideal inclusive growth strategy,” it said, adding that the probability of success in this endeavour is directly proportional to the appreciation of the enormity of the challenge and the gravity of the consequences of failure.
Learning from the lessons of the past, capacity building and institution building is the need of the hour for India to capitalise on the opportunity that lies ahead.
India’s demographic advantage and diverse economic landscape position it uniquely to benefit from AI.
“However, achieving these benefits requires significant investments in education and workforce skilling, supported by enabling, insuring, and stewarding institutions. These mechanisms can help workers adapt to changing demands while providing essential safety nets,” it said.
PTI