Sudipto Mundle: How artificial intelligence has begun to reshape India’s challenge of job generation

The recent Artificial Intelligence (AI) Summit in New Delhi has brought home the remarkable pace at which AI is changing the way we live and work. The jury is still out on whether an AI-led society would be utopian or dystopian. Meanwhile, we need to reset our thinking on many issues.

Around this time last year, in my presidential address to the Indian Econometric Society [Journal of Quantitative Economics, 2025, 23:319–331 bit.ly/4s4McEJ], I had discussed India’s growth paradox: namely, that though India has been the fastest growing major economy in the world for quite some time, the number of unemployed in the country has also been growing almost as fast. To address this employment challenge, I had outlined a strategy based on three pillars. Within just a year, I now need to revisit that strategy, not because the pillars have changed but because the content of each pillar has to be adapted to a rapidly changing employment context driven by the rising tide of AI.

The first pillar I had outlined, the short-term one, was the need to deploy ‘industrial policy’ for the non-agricultural sector to help accelerate the growth of employment-intensive industries in addition to high-tech industries and services. The latter add a lot to GDP but relatively little to employment. In comparison, just six employment- intensive sectors account for as much as two-thirds of all employment outside agriculture: construction, trade, land transportation, processing of food and beverages, apparel manufacturing, hotels and restaurants.