Economic Survey sounds alarm on AI, calls for education-industry links

The Economic Survey 2025, tabled on January 31, has revealed an opportunistic caution. India stands at the threshold of a technological shift that could redefine its workforce for decades. With 26 per cent of its population aged between 10 and 24, the country is ready to reap the benefits of a demographic dividend — provided it can successfully integrate its youth into productive, sustainable employment. But as Artificial Intelligence (AI) rapidly automates tasks, the Economic Survey 2025 issued a stark warning: technology-specific skills risk becoming obsolete faster than ever.

 

India’s employment challenge is no longer just about creating jobs; it is about ensuring workforce quality, it noted. The survey highlighted that critical thinking, creativity, and deep domain expertise will soon outweigh narrowly focused technical skills. Foundational and soft skills will be the new currency of employability in an era where AI tools can automate much of basic knowledge creation and processing.

 

 

“Thus, India’s employment challenge is not just about numbers but also about raising the overall ‘quality’ of the workforce,” the Economic Survey, which comes a day ahead of the Budget, said.

 

The AI paradox: Threat or opportunity? 

Anxieties surrounding AI’s impact on jobs are not unfounded, the survey mentioned. According to a study conducted by IIM Ahmedabad, 68 per cent of employees fear that their jobs will be partially or fully automated within the next five years, and 40 per cent believe AI will render their skills redundant. The banking sector, for instance, is already seeing increased AI adoption, with well-capitalised banks leading the charge.

 

However, the survey also offered a counter-narrative, that AI could enhance employment rather than destroy it. If demand in AI-driven industries remains high, machine-augmented labour can increase productivity and job opportunities. The key, the report suggested, is ensuring ‘elastic demand’ — a scenario where technological advancements stimulate more economic activity rather than replacing human roles.

 

India’s strength in research and development (R&D) provides a window of opportunity. The country is uniquely positioned to catch up with or even surpass global AI leaders by leveraging its young and adaptable workforce. The government has already laid the foundation with policy initiatives such as AI Centres of Excellence (CoEs) in top educational institutions and a Rs 1 trillion financing corpus to fuel private-sector R&D in emerging technologies.

 

How can India reshape its workforce? 

The evolution of India’s workforce is already visible. The survey highlighted the share of self-employed workers has surged from 52.2 per cent in 2017-18 to 58.4 per cent in 2023-24, reflecting a shift towards entrepreneurship and flexible work arrangements. Meanwhile, the percentage of casual workers has fallen from 24.9 per cent to 19.8 per cent, signaling a move towards more structured self-employment opportunities.

 

Yet, these gains must be backed by an education system that prepares the workforce for AI’s integration into the job market. The Economic Survey 2024-25 called for deep collaboration between academia and industry to ensure students graduate with the skills needed to thrive in an AI-driven economy. Expanding academic autonomy, creating centres of excellence, and attracting global talent will be crucial to this effort.