Generative artificial intelligence (AI) will add around $359-438 billion to India’s GDP by 2029-30, Michael Debabrata Patra, deputy governor, the Reserve Bank of India, said at a conference in Jaipur today. Speaking on ‘Digital Technology, Productivity and Economic Growth in India’, Patra said Indian firms' integration of AI into production processes has increased from 8% in 2023 to 25% in 2024. The government, he said, has also committed ₹1.25 lakh crore towards its semiconductor industry development.
Patra said generative AI itself could increase global GDP by $7-10 trillion over the next three years. "Large language models are estimated to increase the productivity levels of workers by 8 to 36 per cent."
Talking about the digital revolution that has taken place in the past decade, Patra said the global digital economy accounts for over 15% of global GDP and that India is at the forefront of it. "Financial technology (FinTech) is speeding up digital payments. The India Stack is expanding financial inclusion, galvanising banking infrastructure and public finance management systems covering both direct benefit transfers and tax collections."
The digital economy currently accounts for a tenth of India’s GDP. "Going by growth rates observed over the past decade, it is poised to constitute a fifth of GDP by 2026," said Patra.
Patra, however, flagged that new technologies also involve challenges. He cited some of the hurdles including disruptions in respect of traditional technologies and the labour market; resource-intensity - demanding substantial investment in technology, learning, and infrastructure; potential cyber threats and data breaches; ethical concerns, data privacy; and potential malicious use.
Patra said the interaction of digitalisation with economic growth and productivity is yet to be unravelled fully. "Exploiting the growth-enhancing potential of digitalisation and new technologies will involve judiciousness and a skilful balancing of risks and rewards so as to enhance the gains while minimising disruptions," he adds.
Patra said complementary policies will play a key role in unlocking new growth energies offered by digital technologies. They will involve improving technical and managerial capabilities; promoting competition to reduce market concentration; and efficient resource reallocation.
India is aiming to catch up on the AI race led by countries like the U.S. and China. Prime Minister Narendra Modi, during the NDTV World Summit 2024 in New Delhi last month, had said that India has the advantage of "double AI power" -- the first AI, Artificial Intelligence and the second AI, Aspirational India. He said when the power of Aspirational India and Artificial Intelligence combine, it is natural for the pace of development to be faster. "Artificial intelligence is not just a technology for India, but a gateway to new opportunities for India’s youth."
The PM also talked about the launch of the 'India AI Mission' and emphasised increasing AI use in healthcare, education and startups. “India is committed to delivering world-class AI solutions, and through platforms like Quad, we are taking significant initiatives to drive this forward.”
Notably, this year's Nobel Prize in physics celebrated the role of AI in revolutionising the way people work and live. It is widely believed that AI and robotics will usher in a new wave of secular innovation, much like past breakthroughs in steam power and personal computers.
