CEA Calls for Growth Model Rethink
AI-Era Growth Strategy Needed as India Reconsiders Jobs, Productivity and Development
India is at an “inflection point” in its economic development and needs to reconsider its growth strategy as artificial intelligence reshapes industries and employment, Chief Economic Adviser V. Anantha Nageswaran said on Wednesday.
Speaking about India’s development model, Nageswaran argued that the country should adapt its approach for an AI-driven economy rather than simply following the capital-intensive development path adopted by richer economies. He said AI should be used to augment workers rather than replace them, according to Business Standard.
The CEA’s comments come as artificial intelligence is increasingly changing the way businesses organise production and services. For India, the challenge is to use new technology to raise productivity while continuing to create sufficient employment opportunities for its large workforce.
Nageswaran’s argument places job creation and productivity growth at the centre of India’s next phase of development. Instead of relying primarily on automation that substitutes labour, the approach he outlined would seek to combine human workers with AI tools to improve their capabilities and output.
The issue is particularly relevant as India seeks to maintain strong economic growth while expanding opportunities for its young workforce. In separate recent remarks, Nageswaran has also urged the private sector to increase investment, create jobs and provide fair compensation, while encouraging young people to develop practical and vocational skills aligned with market requirements.
India’s growth strategy is also being discussed against a changing global economic backdrop. The International Monetary Fund’s Deputy Managing Director Nigel Clarke recently said India remains a key driver of global growth, citing its economic fundamentals and policy framework while highlighting the need for sustainable and inclusive growth.
The AI transition therefore presents both opportunities and challenges for India. Expanding the use of AI could improve productivity across sectors, but the way businesses and policymakers manage technology adoption will influence its impact on employment, skills and income growth.
Nageswaran’s remarks underline the need for India to develop a growth model suited to its own economic structure, where technology adoption, worker productivity and employment creation advance together rather than treating automation as a substitute for human labour.