AI Integration in India’s Labour Market to Boost Productivity, Jobs: Economic Survey

GG News Bureau
New Delhi, 31st Jan. The Economic Survey 2024, tabled in Parliament on Friday, emphasizes the potential of artificial intelligence (AI) in transforming India’s labour market. According to the survey, integrating AI will enhance productivity, elevate workforce quality, and create jobs, provided the country effectively tackles systemic challenges through strong institutional frameworks.

The survey highlights that AI adoption aligns with India’s services-driven economy and youthful, adaptable workforce. “For India, a services-driven economy with a youthful and adaptable workforce, the adoption of AI offers the potential to support economic growth and improve labour market outcomes,” it noted.

One of the key areas the survey underscores is the prioritization of education and skill development. “Prioritising education and skill development will be crucial to equipping workers with the competencies needed to thrive in an AI-augmented landscape,” the report states. It adds that India has the opportunity to prepare its workforce for a future where human and machine intelligence collaborate, benefiting from the early stages of AI technology globally.

The Economic Survey also noted the positive impact of post-pandemic recovery and formalisation in India’s labour market. According to the 2023-24 Periodic Labour Force Survey (PLFS) report, the unemployment rate for those aged 15 years and above has decreased from 6 percent in 2017-18 to 3.2 percent in 2023-24. The labour force participation rate (LFPR) and worker-to-population ratio (WPR) have also shown growth.

In the second quarter of FY25, the urban unemployment rate slightly improved to 6.4 percent from 6.6 percent in Q2 FY24, with both LFPR and WPR rising.

The survey highlights that formal employment in India has been on the rise, with net Employees’ Provident Fund Organisation (EPFO) subscriptions increasing from 61 lakh in FY19 to 131 lakh in FY24. Net additions in the first eight months of FY25 reached 95.6 lakh, largely driven by youth, with workers aged 18-25 contributing to 47 percent of net payroll additions. This reflects the growing trend towards formal employment, improving workers’ access to social security.

The government’s initiatives have been vital in driving this trend, enhancing the formalisation of the job market, according to the Economic Survey.