Economic Survey flags AI’s ‘deleterious impact’ on jobs, ‘pall of uncertainty’ for workers across skill segments in India

“…the advent of artificial intelligence casts a huge pall of uncertainty as to its impact on workers across all skill levels – low, semi and high,” The Economic Survey 2023-24 said. “These will create barriers and hurdles to sustain high growth rates for India in the coming years and decades. Overcoming these requires a grand alliance of union and state governments and the private sector.”

“…studies suggest that the application of AI is likely to restrain the growth opportunities for business services progressively and, therefore, poses a challenge to long-term sustainability and job creation. Thus, focusing on human capital to take advantage of the agglomeration effects of large, well-functioning cities is critical for the growth of services, especially those with global market potential,” the Survey added.

The Survey’s comments come amid a global debate on the impact AI could have on jobs, and whether it would render some low-middle skilled jobs completely irrelevant. The impact on economies like India, where such a workforce forms a majority of the population, has been under the limelight since the era of generative AI took the world by storm two years ago.

Noting the medium-term growth outlook for the Indian economy, the Survey said that while technology, in general, enhances productivity, the “social impact of emerging technologies such as AI via labour market disruptions and labour displacement is barely understood. It also has the potential to skew the capital and labour shares of income in favour of the former.”

The Survey said that India will “not remain immune” to the AI transformation as it will “reshape” the future of work.

“While AI has considerable potential for boosting productivity, it also has the potential to disrupt employment in certain sectors. Routine tasks, including customer service, will likely witness a high degree of automation; creative sectors will see extensive usage of AI tools for image and video creation; personalised AI tutors can reshape education and sectors like healthcare can witness accelerated drug discovery,” the Survey said.

The corporate sector has a responsibility, as much to itself as it is to society, to think harder about ways AI will augment labour rather than displace workers, the Survey said.

“We do not have a full picture of overall corporate hiring in the country on a regular basis. In any case, deploying capital-intensive and energy-intensive AI is probably one of the last things a growing, lower-middle-income economy needs,” it said.

During a press conference Monday, chief economic advisor V Anantha Nageswaran said that jobs in the business process outsourcing (BPO) sector, in particular, could be under the most amount of pressure with the advent of AI, even as he maintained that the larger impact of AI on job losses or creation remains uncertain globally.

“…at particular risk is the BPO sector, where GenAI is revolutionising the performance of routine cognitive tasks through chatbots, and employment in the sector is estimated to decline considerably in the next ten years,” the Survey noted.

In another first, the Survey also spoke about the intersection of AI and climate change, highlighting the impact the new age technology could have on the former, and how it is forcing companies to already delay their net zero goals.

“It would be a comedy if it were not real and tragic. Even as developed nations prepare to impose a carbon tax at the border on imports coming into their countries laden with carbon, they are ramping up energy demand like never before, thanks to their obsession with letting AI guide, take over and dominate natural intelligence,” the Survey said.

“One of the leading global technology companies promised to achieve Net Zero by 2030 at the turn of the decade. But, the race to dominate the emerging technology of Artificial Intelligence has caused its emissions to be higher by 30 per cent by 2023,” it added.