His remark comes as the Union Budget 2025 significantly boosts funding for the IndiaAI Mission, the government’s flagship AI initiative, with an outlay of ₹2,000 crore—a staggering 262% increase from the previous year’s ₹551.75 crore. The move underscores India’s ambition to position itself as a global leader in AI, but also raises concerns about the impact of AI on jobs and economic stability.
AI and the looming labour crisis
The government’s Economic Survey 2025, released ahead of the Budget, highlighted growing fears over AI’s potential to disrupt labour markets. It warned that if companies fail to manage AI adoption carefully, there could be an inevitable demand for policy intervention—including taxation on corporate profits derived from replacing human labour with AI, as suggested by an IMF paper.
For a labour-surplus country like India, widespread AI-induced job displacement could have severe consequences. The Survey called for a balanced approach, urging regulatory frameworks, workforce reskilling, and economic safety nets to mitigate AI’s disruptive effects.
AI investment soars, but at what cost?
AI adoption in India is accelerating rapidly. A 2024 IDC report projects that spending on AI-centric systems—including software, services, and hardware—will reach $6 billion by 2027, growing at a 33.7% compound annual rate.
The Economic Survey noted that AI advancements are already reshaping critical sectors such as healthcare, finance, education, and criminal justice, with tech leaders anticipating office-ready AI workers by the end of 2025.
Despite its potential to boost efficiency, AI’s ability to outperform humans in decision-making raises ethical and economic concerns. Experts warn that corporate optimism over AI’s cost-cutting potential could exacerbate social and economic inequalities, particularly impacting entry-level jobs.
Striking a balance
The Survey noted that India has a window of opportunity to prepare for AI’s impact, urging a tripartite collaboration between government, the private sector, and academia to ensure the benefits of AI-driven productivity are widely distributed. It also stressed the need for education reforms, skilling programs, and strong institutions to support workers through the transition.
