Economic Survey 2025: AI an unprecedented opportunity and challenge

State may resort to taxation of profits generated from replacement of labour with tech

The Economic Survey 2024-25 said that the rapid advancement of artificial intelligence (AI) presents both “unprecedented opportunities” and “significant challenges” for labour markets worldwide.

 

“In this context, as policymakers, it is important to pay attention to the evolving technological landscape and the potential impact it can have on the labour market,” said the survey.

 

The Economic Survey talks in detail on the impact of AI on India and what should be the focus.

 

The survey suggested that companies should strategically and efficiently use AI over a longer horizon to maximise its positive impact on productivity, employment, and economic growth.

 

 

And it cautioned, “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.”

 

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, the survey warned, while saying that it will leave everyone worse off and the country’s growth potential will suffer, as a result.

 

It goes on to say that education and skilling are going to play a critical role in driving the success of human-centric AI adoption in the country while “minimising labour displacement as best we can”.

 

The survey calls for collaboration between policymakers, the private sector, and academia.

 

“India can align AI-driven innovation with societal goals. Ensuring inclusivity and sustainability in this transition is key to maximising benefits while minimising disruptions.”

 

Importantly, the survey also talks about the quality of the workforce when it comes to AI’s impact. The survey says that India’s employment challenge is not just about numbers but also about raising the overall “quality” of the workforce.

 

“Improvements in the quality of the workforce must focus on more foundational skills as well, such as soft skills and core competencies which are valuable across industries and roles.”

 

The survey goes on to say that what new opportunities will emerge from the spillover effects of AI will only be clear once AI goes from experimental to practical, but reinforcing the point made earlier, it is up to policymakers, academia, and the private sector to work together to raise the overall quality of human capital in India.