Artificial Intelligence And Inclusive Growth: Economic Impact And Challenges For India

Source: Indian Express
GS III: Science and technology

Why in the News?

The World Bank Group’s World Development Report 2026: The Promise of Artificial Intelligence highlights the potential of Artificial Intelligence (AI) to improve productivity, strengthen public services and expand economic opportunities, while emphasising the need to ensure that its benefits reach all sections of society.

News in Brief

• AI investments are concentrated in a few countries and companies, raising concerns about unequal access to technology and economic gains.
• Developing countries can use AI to improve agriculture, healthcare, education and public administration.
• Limited infrastructure, skills and institutional capacity remain major barriers to AI adoption.
• India’s Digital Public Infrastructure (DPI) offers lessons for making technology affordable, accessible and scalable.

AI and Economic Growth

• AI can improve productivity, support innovation, strengthen public services and create new economic opportunities.
• Its economic value depends not only on developing advanced models but also on their practical application across sectors.
• The benefits of general-purpose technologies often spread when they become accessible to ordinary businesses, workers and consumers.

Unequal Distribution of AI benefits

• Investment in advanced chips, computing infrastructure, data centres and AI models is concentrated in a few countries and companies.
• This concentration may increase market power and create dependence on a small number of technology providers.
• Developing countries risk falling behind if they lack the resources and capabilities needed to adopt AI.

Employment and Productivity

• AI may automate certain tasks while complementing human capabilities in others.
• Workers in low-and middle-income countries face risks from automation but can also benefit from productivity improvements.
• The impact on employment will depend on the nature of work, the extent of AI adoption and workers’ ability to acquire new skills.

Challenges to AI adoption

• Infrastructure gap: Reliable electricity, internet connectivity, computing resources and affordable devices are essential.
• Skill deficit: Workers need appropriate skills to use AI effectively.
• Institutional capacity: Governments require the ability to evaluate, procure and regulate AI systems.
• Market concentration: Dependence on a few providers may limit competition and innovation.
• Unequal access: Small businesses, rural communities and disadvantaged groups may not benefit equally from AI.

AI Applications in India

• Agriculture: AI-based advisory services can help farmers access information on crops, weather and agricultural practices.
• Healthcare: AI can support disease screening, diagnosis and access to health services.
• Education: AI tools can assist teachers and improve access to learning resources.
• Public administration: AI can improve service delivery and administrative efficiency.
• Digital platforms: Bharat VISTAAR and AI-based agricultural tools illustrate the potential of technology to address local needs. Their wider impact will depend on accessibility and adoption.

Lessons from Digital Public Infrastructure

• India’s experience with Aadhaar, UPI and DigiLocker demonstrates how shared digital infrastructure can reduce costs and expand access.
• Open and interoperable systems can encourage competition and innovation.
• Similar principles can guide AI adoption by reducing dependence on individual providers and allowing different applications to operate on common platforms.

India’s Approach to AI

• India need not match the massive AI investments of leading global technology companies.
• Instead, it should focus on building capabilities that expand access and generate wider social and economic benefits.
• Initiatives such as the IndiaAI Mission, AI research, Indian-language models and shared computing infrastructure can support this objective.
• The priority should be to develop practical AI applications, strengthen domestic capabilities and prevent excessive dependence on a limited number of technology providers.

Way Forward and Conclusion

India should strengthen electricity and internet infrastructure, expand AI education and reskilling, and develop affordable solutions suited to Indian languages and local needs. Evidence-based policies, open standards, interoperability and the scaling of successful pilot projects can promote competition and reduce dependence on a few technology providers.

AI can drive economic growth, but technological progress alone cannot ensure inclusive development. India must combine infrastructure, skills, strong institutions and accessible digital platforms to improve productivity and ensure that the benefits of AI reach farmers, workers, small businesses and disadvantaged communities.

UPSC Prelims and Mains Practice Question

Consider the following statements about Artificial Intelligence:

1. AI can improve productivity in agriculture, healthcare and public administration.
2. Access to computing infrastructure and skilled workers influences the adoption of AI.
3. Digital Public Infrastructure can help reduce barriers to technology adoption.

Which of the statements given above are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Answer: (d) 1, 2 and 3

Mains Practice Question

Q) Artificial Intelligence has the potential to accelerate economic growth, but its benefits may not be distributed equally. Discuss the challenges of AI adoption in developing countries and suggest measures to ensure inclusive growth. (250 words)

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