Kunal Shah, founder of CRED, warns that experts must become “AI native” to stay relevant, as automation poses risks to jobs in India’s labor-intensive economy. The Economic Survey acknowledges AI’s dual nature, presenting both opportunities and challenges, and suggests an AI tax to support reskilling amid job displacement fears. With automation potentially cutting 200,000 banking jobs in the near future, industry leaders like TCS and Wipro recognize the impact of AI on hiring. However, calls for collaboration between government, industry, and academia emphasize the importance of leveraging human and machine capabilities to ensure equitable benefits from AI advances.
Kunal Shah, the founder of CRED and co-founder of Freecharge, issues a crucial reminder: “Every expert must embrace AI to stay relevant. Those who refuse to accept this reality will be left behind.”
India’s Economic Survey reinforces his warning. With automation poised to jeopardize millions of jobs in a workforce-heavy economy, the government is considering an AI tax to mitigate the impact. A January 2024 report from the IMF indicates that such strategies could facilitate reskilling initiatives and maintain economic stability.
The survey characterizes AI as a double-edged sword—providing “unparalleled opportunities alongside considerable challenges.” India’s large labor force and low wages heighten the risk of job displacement compared to wealthier countries. The government’s AI strategy, which features incentives for semiconductors and the development of indigenous AI models, seeks to harmonize innovation with the preservation of employment.
However, not everyone supports the idea of an AI tax. “Any nation that even contemplates penalizing companies for adopting AI risks being left behind for good,” cautions Gaurav Parab, principal research analyst at UK-based NelsonHall. Bloomberg reports that banks—among the first to adopt AI—could potentially cut 200,000 jobs within the next 3 to 5 years. Major Indian IT firms like TCS and Wipro acknowledge that AI is already decelerating their hiring processes.
Nonetheless, there are those who perceive opportunities in reskilling. “The true potential of AI lies in augmented intelligence—combining human and machine capabilities,” notes Nitin Bhatt, technology sector leader at EY-India. The survey advocates for a tripartite collaboration among government, industry, and academia to ensure that the benefits of AI are distributed broadly.
As things stand, AI taxation is still merely a proposal. However, as automation continues to transform industries, India’s capacity to adapt—whether through regulation, innovation, or workforce evolution—will ultimately shape its economic trajectory.