India stands at a very important moment in its AI journey in 2025. The rise of artificial intelligence offers vast opportunities but also poses challenges for jobs and the economy. Reports forecast AI could reshape over 10 million jobs and create 3 million new tech roles by 2030. India leads in AI transformation compared to regional peers like Singapore and Australia. Yet, the impact on employment depends on how India navigates structural issues and policy choices.
AI’s Impact on Jobs and Economy
AI will change many jobs rather than eliminate them entirely. The farm sector, employing most Indians, has minimal AI exposure. However, the services sector, contributing 55% of GDP and 31% of employment, faces AI influence. Slow skill development and informal employment limit workers’ ability to adapt. The key question is whether AI will widen or narrow existing employment gaps.
Automation Versus Augmentation
Two AI pathways exist – automation and augmentation. Automation replaces human labour to boost efficiency but risks job losses. Augmentation uses AI to support workers, improving productivity without reducing jobs. India’s challenge is to avoid automation-first approaches and focus on augmentation. Nobel Laureate Daron Acemoglu emphasises that AI’s impact is a choice, not a fate.
Strategies for Inclusive AI Growth
India must prioritise three pillars – skilling workers, reducing inequality through inclusive infrastructure, and encouraging entrepreneurship. Companies like Tata Steel and Infosys show AI can assist workers rather than displace them. Lifelong learning is crucial. Digital skills and AI competencies must be part of education from schools to vocational centres. Partnerships among academia, industry, and government are vital to scale efforts.
Role of Policy and Infrastructure
Open and competitive markets are essential for inclusive AI. Dominance by a few large firms risks restricting access and innovation. India must ensure competitive access to cloud computing, open APIs, and interoperable systems. Supporting indigenous AI models, vernacular tools, and domain-specific agents will democratise AI innovation. Treating computing, storage, and data as public goods can prevent monopolies.
Supporting MSMEs and Innovation Ecosystem
Micro, small and medium enterprises (MSMEs) can drive employment-rich growth if empowered with AI tools and skills. Public investment should focus on building a broad ecosystem, not just scaling unicorns. Incubators, accelerators, and mentorship must nurture sustainable enterprises. AI’s promise lies in combining technology with human potential to encourage inclusive economic development.
Questions for UPSC:
- Discuss in the light of India’s economic structure how artificial intelligence can transform employment patterns in the service and agricultural sectors.
- Critically examine the dual pathways of automation and augmentation in artificial intelligence and their implications for inclusive growth in developing countries.
- Explain the role of digital public infrastructure in promoting innovation and competition in the AI economy. With suitable examples, discuss how such infrastructure can support small and medium enterprises.
- Comment on the challenges of skilling and lifelong learning in the context of rapid technological change. How can policy interventions ensure equitable access to AI-related competencies?
