| UPSC Relevance GS Paper II (Governance): AI policy, regulation, and inclusivity. GS Paper III (Economy & Technology): AI’s impact on employment, productivity, and MSMEs. Essay: “Artificial Intelligence: A partner in development, not a threat to livelihoods.” |
Why in News?
Artificial Intelligence (AI) is increasingly becoming a driver of productivity and innovation across the globe. In India, it is seen both as an opportunity to create millions of jobs and as a challenge that might displace existing employment.
- According to the ServiceNow–Pearson AI Skills Research 2025 report, AI could reshape around 10.35 million jobs and generate 3 million new tech-based roles by 2030.
- This positions India ahead of Singapore and Australia in terms of AI-driven transformation.
- However, the International Labour Organisation (ILO) warns that as new tasks emerge, many old jobs may disappear, especially in labour-intensive sectors.
Thus, India’s central challenge is: How can AI be made inclusive—supporting workers, MSMEs, and small entrepreneurs instead of replacing them?
Background: India’s Employment Structure and AI’s Dilemma
India’s economy is labour-driven. Agriculture and low-skilled services employ the majority of the population. But these sectors have limited AI exposure.
- Labour-intensive services: Contribute 55% to GDP and 31% of jobs (FY24). These include retail, hospitality, logistics, and IT-enabled services.
- Agriculture: Still the largest employer, but technologically backward in AI adoption.
Here lies the AI dilemma:
- Automation Path – Using AI to replace workers for efficiency.
○ Example: Banks using AI chatbots instead of human customer support.
○ Risk: Large-scale unemployment in routine jobs. - Augmentation Path – Using AI to assist human workers, enhancing productivity while preserving jobs.
○ Example: Doctors using AI diagnostic tools to detect diseases faster.
○ Benefit: Workers remain relevant while productivity rises.
👉 The policy question is whether India will use AI as a partner (saathi) or a job-destroyer (vinashak).
Challenges of AI Adoption in India
- Slow Skilling and Reskilling
○ Workers are not adapting fast enough to AI-driven roles.
○ Vocational training in India remains limited; lifelong learning systems are weak.
○ Example: While Infosys has launched reskilling programs for engineers, small-town workers still lack access to AI training. - High Informality of Workforce
○ Around 80–85% of Indian workers are in the informal sector.
○ Informal workers have no social security, making them vulnerable if AI-driven automation reduces job demand. - Sectoral Vulnerability
○ Labour-intensive services (retail, BPOs, logistics) are highly exposed to AI.
○ Example: Call centres could be replaced by generative AI voice bots. - Digital Divide
○ MSMEs lack funds for cloud computing, AI software, or digital tools.
○ This creates a risk of big firms monopolising AI benefits, leaving small businesses behind. - Concentration of Power
○ AI infrastructure—like cloud storage, foundational models, and large-scale computing—may be dominated by a few multinational companies.
○ Example: If Google, Microsoft, or OpenAI control AI platforms, Indian startups may struggle to compete
Opportunities of AI for India
Despite risks, AI also offers transformative opportunities if guided properly:
- Boosting Productivity
○ AI in agriculture: Precision farming tools can help farmers monitor soil, water, and crop health.
○ AI in healthcare: Early detection of diseases through AI imaging.
○ AI in logistics: Reducing delivery times and costs. - Lifelong Learning and Skilling
○ Embedding AI-related training in schools, universities, and technical institutes.
○ Example: Future Skills PRIME and Startup India are already preparing youth for digital-first jobs. - MSME Empowerment
○ Generative AI tools (e.g., Chatbots, low-cost AI design software) can help small firms compete with bigger companies.
○ Example: A handicraft seller using AI-driven e-commerce analytics to expand reach.
- Innovation and Entrepreneurship
○ AI startups are emerging in fields like fintech, ed-tech, and agri-tech.
○ Example: AI-based platforms helping farmers access real-time weather and market prices.
Government and Policy Role
To ensure AI is an enabler, India needs strong policy interventions:
1. Building Digital Public Infrastructure (DPI) for AI
- Just like UPI revolutionised payments, India must create open digital platforms for AI.
- Features:
- Shared datasets as public goods.
- Open APIs for innovation.
- Affordable access to computing power.
2. Democratising AI Innovation
- Develop Small Language Models (SLMs) tailored to Indian languages and domains.
- Encourage vernacular AI tools so that AI becomes accessible beyond English-speaking elites.
- Example: An AI model in Hindi or Tamil for farmers to access weather forecasts.
3. Inclusive Skilling and Worker Protection
- Launch a National AI Skilling Mission for both low-skilled and high-skilled workers.
- Link AI adoption with social protection measures like unemployment insurance.
- Ensure AI is used to enhance worker well-being, not only cost-cutting.
4. MSME-Centric AI Adoption
- Provide low-cost cloud access for MSMEs.
- Support AI incubators, accelerators, and mentoring hubs.
- Subsidise AI adoption for small businesses.
Way Forward
- Treat Data and Computing as Public Goods: Avoid monopolisation by a few big firms.
- Promote Indigenous Development: Invest in India-specific AI models and startups.
- Public-Private Collaboration: Encourage industry-academia-government partnerships for skilling and innovation.
- Inclusive Growth: Ensure AI benefits flow to farmers, informal workers, and small businesses—not just big corporations.
- Balance Efficiency with Employment: Use AI to support human labour instead of replacing it wherever possible.
Conclusion
Artificial Intelligence presents India with a historic choice. It can either widen inequality by displacing vulnerable workers or become an equaliser by empowering MSMEs and enhancing productivity.
👉 With the right mix of policy choices, digital infrastructure, inclusive skilling, and worker protection, India can make AI an enabler of inclusive growth rather than a disruptor of livelihoods.
Upsc Prelims practice question
Q1. With reference to Artificial Intelligence (AI) adoption in India, consider the following statements:
- Automation in AI focuses on replacing human workers to boost efficiency, while augmentation complements human labour.
- Labour-intensive services contribute more than 50% of India’s GDP and around 30% of employment.
- India has already developed and deployed large-scale indigenous foundational AI models comparable to global giants.
Which of the statements given above are correct?
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: A
(India is still developing indigenous models; global firms dominate foundational AI infrastructure.)
Q2. Which of the following can be considered as part of India’s Digital Public Infrastructure (DPI) for AI?
- Open APIs
- Public datasets as common goods
- Low-cost access to cloud and computing power
- Proprietary models controlled exclusively by multinational firms
Select the correct answer using the code below:
A. 1, 2 and 3 only
B. 2 and 4 only
C. 1, 3 and 4 only
D. 1, 2, 3 and 4
Answer: A
(Proprietary models controlled by big firms go against DPI principles.)
Q3. Consider the following pairs:
| Programme/Initiative | Focus Area |
| 1. Future Skills PRIME | Digital skilling of youth |
| 2. Startup India | Fostering innovation and entrepreneurship |
| 3. UNNATI | Reskilling in AI and advanced technologies |
Which of the pairs given above are correctly matched?
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: D
(All three focus on digital economy and AI-related human capital development.)
Upsc mains practice question-
Q”AI can be India’s ‘Saathi’ rather than a ‘Vinashak’ if policies focus on augmentation and democratisation of innovation.”
Examine this statement with reference to India’s employment structure and digital economy.( 15 MARKS,250 WORDS)
SOURCE- THE INDIAN EXPRESS
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