The Economic Survey, placed in Parliament recently, emphasized the complex and uncertain impact of automation on workers and suggested that India invest in research to “steer the AI bandwagon towards shared prosperity.” The Survey’s lead author, India’s Chief Economic Advisor V. Anantha Nageswaran, highlighted the need for businesses to strike a balance between deploying capital and labour. He pointed out the lack of timely data on the absolute number of jobs created in various sectors, which hampers objective analysis of the labour market.
He stressed that while the present unemployment situation is influenced by multiple factors like the COVID-19 pandemic, it is essential to create conditions for faster growth of productive non-farm jobs. To cater to the rising workforce, the Indian economy needs to generate almost 78.51 lakh jobs annually in the non-farm sector. AI can play a pivotal role in achieving this target by revolutionizing various industries and creating new employment opportunities.
AI’s Potential to Drive Non-Farm Job Creation
AI’s integration into various sectors can significantly contribute to reaching the ambitious goal of generating 78 lakh non-farm jobs annually. The manufacturing sector, traditionally a robust job creator, has faced challenges in recent years. AI can revitalize this sector by enhancing productivity and fostering innovation. AI-driven automation can streamline production processes, reduce waste, and improve quality control, making Indian manufacturing more competitive globally.
This increased efficiency can lead to higher demand for skilled labour to manage and maintain AI systems, thus creating new job opportunities. In the services sector, AI can open up a plethora of employment avenues. For instance, AI can enhance customer service operations through chatbots and virtual assistants, requiring human oversight and continuous improvement. Moreover, AI-driven data analysis and cybersecurity solutions are burgeoning fields that necessitate a skilled workforce, thus generating numerous high-paying jobs.
The construction sector has seen a rise in prominence, driven by the government’s infrastructure push. AI can further bolster this trend by optimizing project management, predicting maintenance needs, and ensuring safety through real-time monitoring. While many construction jobs are currently informal and low-paid, the integration of AI can lead to the creation of more formal, higher-paid positions. For example, AI can assist in designing smart buildings and cities, which require specialized knowledge and skills, thereby offering better employment opportunities to the workforce transitioning from agriculture.
While creating non-farm jobs is critical, improving agricultural productivity remains equally important. AI can play a transformative role here, indirectly supporting the shift to non-farm employment by stabilizing rural incomes and encouraging diversification. AI-driven technologies such as precision agriculture can optimize farming practices, leading to higher yields and better resource management. Higher agricultural productivity can reduce the dependency on farming as the sole source of income, allowing rural workers to seek non-farm employment opportunities without risking their livelihoods.
The rise of agritech startups leveraging AI to offer innovative solutions like drone-based crop monitoring, automated irrigation systems, and AI-powered supply chain management can create new job roles in rural areas. These startups not only employ individuals directly but also generate demand for ancillary services, thereby fostering a supportive ecosystem for non-farm employment. The gig economy is projected to expand significantly, with gig workers expected to form 6.7% of the non-agricultural workforce by 2029-30. AI can facilitate this growth by providing platforms that connect gig workers with job opportunities, optimizing task allocation, and ensuring fair compensation. This can help absorb the rising workforce into flexible, diverse employment roles, contributing to the non-farm job creation target.
Strategies to Leverage AI for Job Creation
To harness AI’s potential for job creation, the government must adopt a multifaceted approach. Establishing AI research centres and fostering public-private partnerships can spur innovation and create high-value jobs in research and development. The Rs. 10,372 crore investment in the IndiaAI Mission aims to create a high-end, scalable AI ecosystem. Continued investment in R&D is essential to drive innovation and maintain India’s competitive edge globally. Equipping the workforce with the necessary skills to thrive in an AI-driven economy is paramount.
The government should invest in comprehensive skill development programs that focus on AI literacy, coding, data analysis, and cybersecurity. Collaboration with educational institutions and industry leaders can ensure that training programs are aligned with market needs, thereby enhancing employability. Enhancing computational capacity is crucial to support the growing demands of AI.
The Union Cabinet’s allocation of Rs. 10,372 crores for the IndiaAI Mission, with nearly half designated for NVIDIA GPUs, is a step in the right direction. However, to meet rising demands, more resources are necessary. Boosting India’s computing infrastructure can support advanced AI applications and create jobs in tech development and maintenance.
Implementing labour reforms that incentivize employers to adopt AI while safeguarding workers’ rights can create a conducive environment for job growth. Encouraging gig work and remote employment can also be beneficial, given the projected expansion of the gig workforce.
The new Labour Codes, once fully operationalized, can play a pivotal role in achieving this balance. Small and Medium Enterprises (SMEs) are the backbone of India’s economy. Facilitating the adoption of AI in SMEs can drive efficiency and innovation, leading to job creation. Government subsidies and tax incentives for AI adoption can encourage SMEs to integrate these technologies into their operations. Increased incentives for public-private partnerships are vital for making advanced AI solutions accessible to small and medium-sized enterprises (SMEs). These partnerships can help scale AI technologies and integrate them into national digital infrastructure initiatives, ensuring robust support for businesses adopting these technologies. Establishing clear regulatory frameworks to promote ethical AI use and protect consumer data is essential. These frameworks can build trust in AI technologies, encourage widespread adoption, and ensure that AI-driven job creation is sustainable and inclusive.
Conclusion
AI holds immense potential to aid the government in achieving its goal of creating more non-farm jobs. By leveraging AI in manufacturing, services, and agriculture, and through strategic policy measures, India can pave the way for a prosperous future where technological advancement and job creation go hand in hand.
The path forward involves addressing skills gaps, promoting public-private partnerships, and ensuring robust regulatory frameworks to drive sustainable growth in the tech sector. Through these concerted efforts, AI can be a catalyst for non-farm job creation, contributing significantly to India’s economic development and social stability.
Yashawardhana, Research Fellow, India Foundation