Economic Survey warns of AI outpacing humans in critical decisions, triggering widespread labour displacement

The Economic Survey was released on January 31, on the eve of the Union Budget

Artificial intelligence (AI) is poised to surpass human performance in critical decision-making, potentially triggering widespread labour displacement, according to Economic Survey 2025.

"AI is anticipated to surpass human performance in critical decision-making across various fields, including healthcare, research, criminal justice, education, business, and financial services. This can result in large-scale labour displacement, especially at the middle- and lower-quartiles of the wage distribution," the survey highlighted.

Adding to the uncertainties of tomorrow is the fact that the speed of research and development (R&D) is outpacing the regulatory and ethical frameworks needed to manage its risks, the survey said further. Moreover, with executives optimistic about the capabilities of AI and the cost-saving potential they expect it to possess, the impact of AI on the labour market, particularly entry-level jobs are turning into a point of concern for policymakers.

"This economic displacement adds to a broader sense of unease about whether AI will exacerbate existing social and economic divides," the document read.

The survey showed that there's a worry that with AI R&D currently concentrated in the hands of a few and very large companies, that control the resources, will erect high entry barriers. This runs the risk that the benefits of AI automation adoption might be concentrated in a few hands.

"Technological developments that worsen inequality can erode any possible benefit that the innovation brings, leaving the public sector responsible for addressing the cost of the transition," the survey said further.

This has led to calls for a more responsible approach to AI adoption, especially in a country like India where employment numbers make the magnitude of impact something worth paying attention to.

The survey said OpenAI has initiated an ‘arms race’ in AI between 2022 and 2024, and many
companies, including big tech firms, have scrambled to capitalise on the demand for AI.

The annual global private investments in Generative AI surged to approximately $25.2 billion by the end of 2023 from $3 billion in 2022. Between 2021 and 2023, global corporate investments in all types of AI totalled $761 billion.

"If one were to look at these trends and the value generation expected from the
investments, it would appear as if the ‘AI revolution’ is here and labour is soon going
to be a thing of the past," the survey read.

Abhishek Narayan, Co-founder & Director, Growing Pro Technologies, said in today’s rapidly evolving digital landscape, AI and other nascent tech are no longer just tools—they are the foundation of innovation and security.

"In this digital transformation era, success belongs to those who embrace innovation while prioritising security, adaptability, sustainability, and ethical AI practices," Narayan said.