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Daily Mains Answer Writing –27 October 2025

Q. Artificial Intelligence represents a new phase of technological acceleration, but its economic benefits remain unevenly distributed. In this context, discuss how AI can be transformed from a productivity revolution into a human welfare revolution.

Reference: GS Paper 3 – Indian Economy: Inclusive growth and issues arising from it; Science and Technology: developments and their applications and effects in everyday life.
Word Limit: 250 words
Marks: 15
Reference: The Hindu, “An Engels’ pause in an AI-shaped world,” September 29, 2025

Analytical Focus for Answer (AFfA):

  • Context and framing: Introduce AI as a general-purpose technology capable of transforming industries but creating uneven economic outcomes.
  • Productivity–welfare disconnect: Explain why AI’s productivity surge has not translated into proportionate wage growth or employment generation.
  • Economic and social risks:
    • Rising inequality: Between nations and within sectors.
    • Job displacement: Coupled with rising “digital survival costs.”
    • AI rent concentration: Benefits accumulating among few global corporations.
  • Pathways to a welfare-oriented AI transformation:
    • AI inclusivity: Promote public investment in compute, data, and education infrastructure.
    • Skills transition: Encourage workforce retraining through models like Singapore’s SkillsFuture programme.
    • Redistributive mechanisms: Introduce Universal Basic Income or robot taxes to mitigate disruption.
    • Ethical AI ecosystem: Foster open and fair AI access ensuring equitable benefits.
  • Critical analysis: Assess whether modern welfare systems, democratic institutions, and faster technological diffusion can make the “AI pause” shorter than historical industrial pauses.
  • Conclusion: Argue that AI’s true success lies not in productivity statistics but in its ability to enhance human welfare, equity, and dignity.

Model Answer

Introduction

Artificial Intelligence (AI) offers transformative potential for India’s economy and society. The key question is whether AI will simply raise productivity or contribute to broad-based welfare. If gains remain concentrated, India risks facing a modern version of the “Engels’ pause” where output grows but many are left behind. Therefore, policy must ensure AI becomes a human-welfare revolution, not just a technological upgrade.

Body

Productivity-Welfare Disconnect in India

  • High uptake: 92 % of Indian employees reportedly use generative AI tools regularly, surpassing the global average.
  • Wage lag: Despite India’s rapid AI adoption, wage growth for large sections remains modest and informal sector workers are especially vulnerable.
  • Job transitions slow: The NITI Aayog states that while AI adoption grows, workforce adaptation is gradual.
  • Task shifts: In IT/ITES, firms are shedding roles (e.g., ~12,000 in one large Indian software company) while pivoting to AI-driven services.

Cost of Complements and Digital Divide

  • Infrastructure investment: India’s public mission approved compute/data infrastructure under the IndiaAI Mission to democratise access.
  • Skill gap: The Finance Ministry notes a shortage of AI-skilled professionals amid growing demand.
  • Adaptation cost: Workers must invest in new certifications and continuous learning, which many low-income Indians cannot afford.
  • Rural-urban divide: Informal and semi-skilled workers in rural areas may not access digital up-skilling, widening welfare gaps.

Uneven Distribution of AI Gains: Indian Dimension

  • Economic potential: NITI Aayog estimates faster AI adoption could add US$500-600 billion to India’s GDP by 2035.
  • Market size: India’s AI market projected to exceed US$17 billion by 2027.
  • Geographic concentration: Most AI investment and infrastructure cluster in tier-1 cities (Bengaluru, Hyderabad), leaving many states trailing.
  • Sectoral skew: High-skill jobs benefit most; large informal workforce remains at risk of stagnation or displacement.

Policy Pathways to a Welfare-Oriented AI Transition

  • Skills transition: Launch of national initiatives to reskill millions under the IndiaAI FutureSkills pillar and partnerships with industry.
  • Public infrastructure as public good: Shared AI compute platforms under IndiaAI lower cost barriers and enable broader access.
  • Redistribution of rents: India must explore mechanisms like targeted cash transfers, enhanced welfare for displaced workers, and inclusive AI deployment in agriculture and health.
  • Ethical and governance frameworks: Regulatory initiatives (Digital Personal Data Protection Act, AI incident reporting) must evolve to cover AI-specific risks.
  • Inclusive deployment: AI should serve low-income and informal workers—for example agritech solutions for 490 million informal workers in India.

Why India Has Opportunity to Shorten the Pause

  • Digital foundation: India’s large internet-user base (700-800 million) and strong STEM education give it a head-start.
  • Policy intent: The government’s early and comprehensive AI strategy (National Strategy for Artificial Intelligence, IndiaAI Mission) demonstrates readiness.
  • Citizen welfare orientation: If India aligns AI deployment in health, education and agriculture with welfare goals, the transition may be faster than historical industrial pauses.

Conclusion

AI’s promise in India is immense but not automatic. Without inclusive policy, strong skilling, open infrastructure and redistributive mechanisms, productivity gains may benefit only a few while many stagnate. India’s challenge is clear: move from a productivity revolution to a welfare revolution. The success of the AI era will be measured not by output figures, but by whether every citizen shares its benefits.