India's ambition to become the world's third-largest economy will be powered by industries embracing artificial intelligence (AI), Finance Minister Nirmala Sitharaman said on May 29, while stressing the need for productivity-enhancing technologies such as Web3, and robust digital and energy infrastructure.
Speaking at an event hosted by the Institute of Economic Growth in Delhi, the minister highlighted the transformative impact of AI-led innovation and emerging technologies on various sectors. “The industries which will help India reach the position of third largest economy are the ones adopting AI. To bring critical change in productivity, the rapidity that some sectors are showing, the feature defining that change is Web3,” Sitharaman said.
She also underlined the government's commitment to bridging the digital divide, citing progress made since the COVID-19 pandemic. “In every district optical fibre has already reached, schools are being provided access to it on priority. After Covid, the digital divide between cities and rural areas has been bridged,” she added.
Addressing the need for reliable energy to support economic growth, Sitharaman said the government is making room for alternative solutions beyond renewables. “We are making provision for small modular nuclear reactors to produce sustained base energy, because renewable yet to find its storage system,” she said, acknowledging storage challenges in renewable energy.
The Finance Minister’s wide-ranging address touched on some of the core pillars of India's development agenda from digital inclusion and AI-driven growth to education reform, defence preparedness, and climate transition.
Neighbourhood Diplomacy
On national security, Sitharaman emphasised efforts toward indigenous defence production and integrated capabilities across the armed forces. “Today's defence production still has a component of import. Systems in defence are able to integrate imported equipment. There is interoperability among the three armed forces. Operation Sindoor has brought in various aspects of our defence production, and integration of imported equipment,” she said. She added that “Operation Sindoor has shown indigenisation, integration of defence forces, and not crossing borders physically but hitting deep into enemy territory.”
She also spoke about growing regional cooperation, pointing to cross-border projects with neighbouring countries. “With neighbours like Bhutan, Bangladesh, Maldives, Nepal, Sri Lanka, Afghanistan we have improved momentum of integrated projects like inland waterways, telecom network, Rupay cards. These are important for India and we are continuing with it,” Sitharaman said.
Education Reform
Discussing the changing landscape of education and workforce demands, Sitharaman called for increased flexibility in regulatory frameworks to attract private investment in the education sector. “We're gradually increasing expenditure on education,” she said.
“For education it's also a question of mobilising the states and also private investments for which the policy framework will have to be friendly. Regulations will have to be very relaxed, so that there is a lot of autonomy for education institutions and above all, quality teachers will have to be available at every level. So money is one thing, but to bring in the support mechanisms to make sure that the environment is created for greater good quality education,” she added.
The Finance Minister stressed the need to align education with the evolving job market. “Concerns are also to be ready for a job market, even that is bringing in newer dimensions, which are not incorporated in our scheme of things at the moment, but the new education policy gives you that opening. We will probably have better allocations made for education and quality outcomes derived,” she said.
Climate Transition Hurdles
On the climate front, Sitharaman warned of rising challenges to financing the transition to cleaner energy. “The challenges for climate mitigation efforts have stacked. Until recently there was great expectation of global funding for climate mitigation efforts, transition to renewable energy, cutting down emissions,” she said. She noted that “much before the level of stabilisation could happen, countries came up with taxation for not so green products. No funds are available yet globally for climate mitigation efforts.”
“We are negotiating globally with multilateral institutions so that they can fund for common cause,” she added, underlining India’s continued advocacy for equitable climate financing.
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