As a major services-driven economy, the Indian information technology (IT) workforce employed in low-value-added services is the most susceptible to automation, the Economic Survey 2024-25 has warned.
In their bid to cut costs, the companies may substitute labour for technology. The effects are already visible in the case of tech firms in India and the business process outsourcing (BPO) sector in the Philippines.
A fall in consumption, resulting from displacement of workforce, is bound to have macroeconomic implications.
“If the worst-case projections materialise, this could have the potential to set the country’s economic growth trajectory off course,” the survey, released on January 31, said.
Protracted labour displacement is something that a labour-surplus country like India cannot afford.
The survey says there a higher weightage should be placed on the possibility of an adverse consequence in such a situation, as complacency can amplify any negative effects by creating a long-lasting impact.
“It is the uncertainty associated with the timeline and magnitude of effects that demands the attention of policymakers,” the document read.
India will have to create an average 78.5 lakh jobs a year in the non-farm sector by 2030 to cater to the rising workforce, the survey said.
Describing policymaking “a wicked problem”, the survey called for overestimating the uncertainties and being overprepared than underestimating the effects and managing the fallout.
Responding to these uncertainties requires coordinated efforts aimed at addressing the structural issues that can intensify the impact of AI on India’s labour market, the document further said.
Also read: Economic Survey 2025 says tech-specific skills run the risk of becoming obsolete very soon
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