Emerging Technologies Like Gen AI To Propel India's Economic Transformation: EY Report

As India sets its sight on achieving 'Viksit' status by 2047, emerging technologies such as generative artificial intelligence are poised to propel the Indian economy, according to a recent report by research and consulting firm EY.

As per EY Economy Watch, various global developments are poised to reshape the economic landscape, presenting both challenges and opportunities for India. The country must prioritise investments in technology and innovation while taking into account key global trends such as climate challenges, de-globalisation and de-dollarisation in its pursuit of becoming a developed nation.

The advent of new technologies, notably generative AI, has potential to enhance productivity and output. According to an EY report, generative AI could boost India's gross domestic product by $359-438 billion by FY30.

“India must navigate these technological shifts with suitable policy interventions to ensure a net positive impact on employment while driving overall GDP growth," said DK Srivastava, chief policy advisor, EY India. "Striking this balance will require strategic policy support that mitigates job displacement while harnessing the growth potential of emerging technologies."

The frequency of natural disasters, intensified by climate change, poses significant economic risks. The Swiss Re Institute had earlier said that unchecked climate change could shrink the global economy by up to 18% by mid-century.

To safeguard against such losses, India must prioritise investments in climate-resilient technology and innovation. The country may need considerable investment in technology to meet its climate-related goals along with sustaining a robust growth trajectory.

The EY report also highlighted geopolitical tensions that are spurring de-globalisation, leading to trade disruptions and fragmentation. India's strategic positioning as a trade connector presents opportunities amid such challenges. The country’s lower government indebtedness provides a buffer against external shocks, affording it greater fiscal space to implement macro-stabilisation efforts during economic downturns. In this context, India is favourably placed as compared to its global peers, the report noted.

“India can learn from the experiences of existing advanced economies and avoid some of the erstwhile pitfalls in the growth process, such as the Middle-Income Trap and the Dutch Disease. This would require careful policymaking and a commitment to responsible fiscal behaviour so that excessive subsidisation or higher government expenditures don't lead to unsustainable commitments,” adds Srivastava.