Without upskilling, AI may put people out of jobs for long: Economic Survey 2025

“India's workforce in low-skill and low-value-added services remains vulnerable to AI. Robust enabling institutions are essential to help transition workers to medium- and high-skilled jobs, where AI can augment their efforts rather than replace them," the Survey said.

"As new auxiliary tasks and sectors emerge from the widespread adoption of technology, enabling institutions facilitate the smooth transition of the workforce to these new jobs, reducing the damage to worker income and preventing loss employability," it added.

However, the Survey cautioned that AI is still a nascent innovation, leaving much scope for interpretation, and thus, proportionate upskilling.

‘Many unknowns’

“If one were to look at these trends and the value generation expected from investments, it would appear as if the ‘AI revolution’ is here and labour is soon going to be a thing of the past. Unease about what AI entails for workers and what it means for humanity as a whole has become part of daily discussions… Since there are many unknowns associated with AI at this point, looking at the present through the lens of previous technological revolutions may provide some insights into the way forward," the Survey noted.

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The Survey also called for a tripartite compact between the government, private sector and academia to ensure that AI-driven productivity gains are widely distributed, and lead to an inclusive growth strategy. It also called for capacity-building and the development of institutions, besides creating ‘safety nets’ to shield existing workers from AI’s economic and social fallouts.

“The latter is of paramount importance, because if transitions are not carefully managed, workers can experience a long-lasting unemployment, with little prospect of catching up to market demands," the Survey added.

Not like Industrial Revolution

Sunil Chemmankottil, country manager for India at Swiss workforce solutions firm Adecco, said that unlike the Industrial Revolution, the AI revolution as cited by the Survey is “fundamentally different."

“We are already aware that AI is already impacting us, but given the amount of variable equations in the fray, it’s important to try and understand that the question of what skills we should adopt have remained unanswered. For India’s low-skill workforce, productivity is the biggest problem," Chemmankotil said.

Low productivity leads to low wages, and with nearly 14 million individuals joining India’s workforce each year, this gives AI a big problem to solve. It is this that needs us to prepare better for the future of the workplace, and as a result, the idea of ‘work’ is likely to remain in a state of flux for the next three to five years."

Regulatory frameworks

However, he added that beyond this, it is difficult to get a telescopic view of how AI may alter the workforce ecosystem. “Even as we prepare to upskill, what are the skills that we should impart to the youngest members of our workforce to prepare for the future? That is the variable that remains without an address, as of now," he said.

The Survey, meanwhile, also called for regulatory frameworks to be updated to align AI with innovation, transparency and accountability. “The corporate sector has to optimize the introduction of AI responsibly over a longer time period, failing which the onus will fall on the government—which will resort to taxation of profits generated from technology replacing labour, severely impacting India’s growth potential," it said.

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Start young

Touching upon the aspect of skill development in preparation of an AI-driven world, the Survey noted that skill development in AI can begin from school education curricula.

“The integration of technology, including AI, has become essential in addressing the rapidly evolving dynamics of the education system. AI-powered learning systems enable personalized learning experiences tailored to individual students' pace and comprehension, contrasting with traditional approaches that rely on a standardized curriculum and uniform pace for all learners. Additionally, AI facilitates adaptive assessments, aligning with students' unique needs and fostering growth at their own pace," the Survey noted.

The incorporation of technology, the Survey further added, also presents “cost-effective solutions, making quality education more accessible and inclusive for a broader population."

“To improve education systems, technology integration may be focused on three key areas: using AI for teacher development and student tutoring, integrating industry-relevant skills and certifications, and creating personalised learning software," it said.