AI can transform Indian economy: Study by Google, Nasscom and ICRIER


India’s National Association of Software and Services Companies (Nasscom) along with the think tank ICRIER and Google launched their research findings from the study titled “Implications of AI on the Indian Economy.”

The transformational potential of AI stems from its application to a diverse range of applications across sectors and its ability to address developmental challenges in agriculture, health care, education and access to financial services, according to the study.

“Its pervasiveness is akin to electricity, computers and other examples of General-Purpose Technologies (GPTs), the emergence and diffusion of which have enabled the wealth of nations,” Nasscom said in a media release.

The report estimates that a unit increase in AI intensity by Indian firms can result in a 2.5 percent increase in India’s GDP in the immediate term. AI intensity is measured as the ratio of AI to total sales of the firm. In the absence of a direct measure of AI at the firm level, the model uses investments in software, databases and computer machinery as a proxy for AI.

However, the current rate of growth in AI investments is unlikely to increase the levels of AI intensity adequately, the study said.

“In order to trigger a positive growth shock, AI intensities should be sharply increased,” the Nasscom release said. “For example, the investment of Rs 7,000 crore [$936 million] approved by the Ministry of Finance towards an Artificial Intelligence program could increase AI investments at rates higher than the business as usual rates. This increase in investment will lead to approximately 1.3 times increase in AI intensity, translating into spillover benefits of 3.2 percent increase in India’s GDP.”

At the study launch event, Amitabh Kant, CEO of the Indian government think tan NITI Aayog, said: “India is in the midst of a once-in-a-generation disruption driven by Artificial Intelligence. Artificial Intelligence has become a strategic lever for economic growth across nations and will continue to be one of the most crucial technologies of the future. By integrating new technologies like AI and ML [machine learning] into various sectors, we can radically leapfrog and catch up with advanced economies.”

In his presentation of the report findings, ICRIER director Rajat Kathuria said: “The vast impacts of AI and the current circumstances combine to merit mission mode action of AI programs across sectors, by government at all levels. This will help overcome the inherent market failure evident in early phases of any technology.”

Nasscom president Debjani Ghosh said: “Artificial Intelligence has a definite role to play in empowering industries, infrastructure and the society at large.”

Sanjay Gupta, country head & VP, Google India, called it a seminal report that estimates a 2.5 percent growth in India’s GDP if the country adopts AI in a sustained way.

“There is no doubt in my mind that with close collaboration between the private and public sector, and by focussing our collective expertise and energies on the most pressing problems of today, we will go a long way towards achieving the vision of a socially empowered, inclusive, and digitally transformed India.”