The growth economics of artificial intelligence

Published: August 30, 2019 3:36:05 AM

As India is moving on the trajectory of digital transformation, the growing penetration of digital technologies in the lives of Indians and the generation of huge volumes of data at every interaction point projects a germane use-case for an AI-driven economy

artificial intelligence, economics of artificial intelligence, AI driven economy, MSME, start-ups, global GDP, Indian economy, information technology servicesThe economic opportunities through AI that India can achieve are huge.

Artificial intelligence (AI) promises impelling potential for the growth of society and economy in today’s times. As India is moving on the trajectory of digital transformation, the growing penetration of digital technologies in the lives of Indians and the generation of huge volumes of data at every interaction point projects a germane use-case for an AI-driven economy. However, for making the ocean of data points work in synergy to transform India as the AI leader, we require the power of AI to address the complex challenges that the country is facing across its demographic diversity.

According to an Accenture report published in December 2017, AI alone can add $957 billion, or 15% of the current gross value added, to the Indian economy by 2035. The economic value can be unlocked primarily through three ways: augmentation delivered through human and machine collaboration, intelligent automation and productivity that comprise $597 billion, $83 billion and $277 billion, respectively. The report further chalks out the transformative potential of AI-driven opportunities in three major areas, including mobilising intelligent automation for complex physical tasks requiring adaptability and agility, empowering existing workforces by complementing and enhancing the skills and abilities, and driving innovation for broad structural transformation of the economy.

Watch Video: How To File ITR-1 for AY 2019-20 in less than 15 minutes

The role of AI in the broader economic perspectives of India entails the participation of the government, large enterprises, MSMEs, start-ups, young entrepreneurs and society at large, and this can make AI a game changer. According to a PwC report, AI could contribute $15.7 trillion to the global economy by 2030, of which $6.6 trillion is likely to come from increased productivity and the rest $9.1 trillion would be generated from consumption-driven economy. Similarly, a Gartner report suggests that, globally, AI-derived business value will reach $2.9 trillion by 2021 from the projected $1.9 trillion in 2019. Another report by McKinsey suggests that AI could provide additional economic output of around $13 trillion by 2030, boosting global GDP by about 1.2% a year.

The economic opportunities through AI that India can achieve are huge. Innovation in AI can help us lead to numerous solutions to address societal issues. For example, India’s linguistic diversity is a major opportunity for developing AI solutions to unify communication across various digital platforms. AI has a potential to address the challenges of demographic diversity of India. A billion-plus population, and hundreds of languages and dialects open up enormous opportunities for AI-powered solutions in the areas of language, vision, translation, speech, machine reading and comprehension. Localisation of technologies using AI can play a critical role in not only unifying a billion-plus people in resolving social challenges, but will also add value to the economic growth of the country. For instance, intelligent digital assistants like Alexa, Google Assistant, Siri and Cortana are enabling people to use local languages and fetch the desired online services without any hassles. AI can play a major role here as a codec for seamless communication across language diversity.

Today, the agricultural and allied sector contributes around 18% to the $2.97-trillion Indian economy. With 50% of India’s working age population employed in agriculture, it’s pertinent to modernise agricultural workforce to improve their productivity and ameliorate farmers’ incomes. The opportunities for AI in the farm sector are undoubtedly massive. According to a report by Accenture, digital and connected farm services can empower 70 million Indian farmers to add $9 billion to their income by 2020. AI can also support SMEs and make them competitive at a time when the government is planning to increase the GDP share of the manufacturing sector to 25% by 2022. According to the World Economic Forum, AI can build additional value up to $3.7 trillion through Industry 4.0 technologies by 2025.

While the opportunities for AI in India are vast, leveraging these opportunities is the key to transform India as a global leader in AI. Indian information technology (IT) services industries are ferrying exceptionally well in executing R&D projects of global technology companies, but the R&D for own products is not equally impressive. The Indian IT industry can leverage collaborative R&D to produce more home-grown technology products for domestic consumption. Every sector in India, be it agriculture, education, healthcare, transportation or communication, has tremendous potential for AI applications to improve the ecosystem and economic output. Indian IT behemoths have already started delivering AI-based platforms to empower clients transform business processes, automate technology maintenance and execute mundane tasks through AI bots.

As the entire world is looking forward to harness the potential of AI for the growth of the industry and for the betterment of society, India has already taken steps to leverage the potential of AI in all walks of life. To foster AI-led growth across all the sections of the society, the government is taking steps to promote Indian tech talent and skills to achieve national goals. With a unique vision of “AI for All”, India can enhance and empower human capabilities to address the challenges of accessibility, affordability and quality of skilled expertise, which, in turn, can help develop scalable solutions for emerging technologies by leveraging collaborations and partnerships among various stakeholders including industry, industry associations, academia, and state and central governments. Besides collaborations, this segment requires a lot of incentivisation and funding support from various stakeholders. As this technology requires massive R&D and innovation, and a highly-skilled manpower for the creation of world-class products, hence sufficient funding is necessary to exploit this technology to its fullest extent.

Pivoted to the visible success of the IT services industry in India, the legacy of technology prowess can further propel the adoption of emerging technologies in various sectors to boost efficiencies, competitiveness, productivity and quality. The adoption of AI across sectors and industries will not only drive competitive edge and operational excellence, but will also considerably improve the quality of life and ensure prosperity for all. Clearly, AI can bring enormous economic and social benefits to citizens across demographics and also help in transforming the country into an economic superpower.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.