In what is considered a mini economic survey – The Indian Economy: A Review, the Department of Economic Affairs has listed out the challenges confronting the Indian economy. According to the report, the reform-led growth that is seen in India over the course of the past nine years is not without its accompanying share of challenges.
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First and foremost, in an increasingly integrated global economy, India’s growth outlook is not only a function of its domestic performance but also a reflection of the spillover effects of global developments. According to the Department of Economic Affairs, increased geo-economic fragmentation and the slowdown of hyper-globalisation are likely to result in further friend-shoring and onshoring, which are already having repercussions on global trade and, subsequently, on global growth.
Secondly, the Department of Economic Affairs highlighted that the trade-off between energy security and economic growth versus energy transition is a multifaceted issue having various dimensions: geopolitical, technological, fiscal, economic and social, and the policy actions being pursued by individual countries impacting other economies.
Thirdly, the advent of Artificial Intelligence (AI) poses a big challenge to governments around the world due to the questions it poses to employment particularly in services sectors, elaborated the Department of Economic Affairs. This was recently highlighted in an IMF paper estimating that 40 per cent of global employment is exposed to AI, with the benefits of complementarity operating beside the risks of displacement. Further, the paper suggests that developing economies must invest in infrastructure and a digitally skilled labour force to fully harness AI’s potential.
Fourthly, according to the Department of Economic Affairs domestically, ensuring the availability of a talented and appropriately skilled workforce to the industry, age-appropriate learning outcomes in schools at all levels and a healthy and fit population are important policy priorities in the coming years. A healthy, educated and skilled population augments the economically productive workforce, highlighted the Department of Economic Affairs.