AI might replace middle-class, lower-paying jobs, according to the Economic Survey.

According to the Economic Survey, the development of AI has repercussions, especially for workers with middle- and lower-class incomes.

According to the Economic Survey 2024-2025, which Finance Minister Nirmala Sitharaman tabled on Friday, while AI developers hope to transform industries by automating a significant amount of economically valuable work, from healthcare and research to finance and education, this development could have serious repercussions.

According to the report, there will be significant job displacement as AI overtakes human decision-making in a variety of industries, which will have an impact on workers, especially those with middle- and lower-class incomes.

The Economic Survey of India is a pre-budget report that examines the state of the Indian economy during the previous fiscal year, summarizes the results of significant development initiatives, and focuses on the government's policy initiatives and short- to medium-term economic prospects.

The full text of the Economic Survey 2024–2025's findings on AI

1. Artificial intelligence developers say they will bring about a new era in which most economically valuable work will be automated. In several domains, such as healthcare, research, criminal justice, education, business, and financial services, AI is expected to outperform humans in crucial decision-making. Large-scale labor displacement may arise from this, particularly in the middle and lower quartiles of the wage distribution.

2. When considering past industrial and technological revolutions, concerns about the negative consequences of widespread AI adoption might not seem so unrealistic. According to former Bank of England Chief Economist Andrew Haldane, earlier industrial and technological revolutions have been "painful," marked by widespread economic suffering, prolonged unemployment for displaced people, and growing income disparities.

3. Consequently, as policymakers, we must take the prospect of such a result coming to pass very seriously, particularly for a nation like India. A significant percentage of India's IT workforce works in low-value-added services, reflecting the country's mostly service-oriented economy. These positions are especially susceptible to automation since businesses may use technology in place of personnel in order to cut expenses.

4. It has always been necessary for society as a whole to work together to minimize the negative effects of creative destruction, which includes building new social infrastructure to support situations where innovation fosters inclusive progress. Therefore, India would need to expedite the establishment of strong institutions by establishing a tripartite agreement between the public, corporate, and academic sectors.

5. Social infrastructure, which includes enabling, insuring, and stewarding institutions, is crucial for assisting our workforce in transitioning to medium- and high-skilled positions where AI can support rather than replace human labor.

6. However, the process of creating these organizations takes a long time because a great deal of financial and intellectual resources must be gathered for a single objective. Thankfully, because AI is still in its early stages, India has the time it needs to solidify its foundations and organize an institutional response across the country.

7. Moreover, before widespread adoption can be accomplished, AI engineers must overcome a few obstacles. Developers must address two fundamental issues: practicality and reliability. For AI to scale, a substantial infrastructure is also required, which takes years to develop. Finally, AI models must aim for efficiency improvements without sacrificing functionality. It would take a significant amount of time to address these issues, which gives India a window of opportunity to act.

8. India has the potential to develop a workforce that can use AI to enhance their job and productivity by leveraging its youthful, vibrant, and tech-savvy populace. Therefore, improving the general caliber of India's workforce is just as important as increasing the country's employment rate.

9. Technology and labor can work in tandem if they are properly balanced. History also demonstrates that automation increased the employment-to-population ratio during the 20th century through careful integration and institutional support. According to this perspective, "Augmented Intelligence," in which workers combine human and technological talents, is the key to the future of work. This strategy seeks to maximize human potential and boost overall productivity at work, which will ultimately benefit society as a whole.

10. Because AI-driven changes in the labor market may have long-term implications, policymakers must weigh innovation against societal costs. In a similar vein, the business community must behave responsibly and handle the implementation of AI with consideration for India's requirements. In order to reduce the negative societal repercussions of AI-driven transformation and promote inclusive growth, cooperation between the public and private sectors as well as academics is crucial.