Economic Survey 2025 | Using AI to cut jobs may result in more tax, warns government

The corporate sector needs to be more sensitive and socially responsible in deploying artificial intelligence (AI), according to the annual economic survey, released on Friday, January 31.

Catch all the updates from the economic survey here.

The rapid advances made on the AI front has raised fears among the workforce of job losses, and the economic survey acknowledges that jobs will be lost across the world, the impact will be felt keenly in India. “…the problem is magnified for India, given its size and its relatively low per capita income,” the report states. 

Impact on Jobs

Goldman Sachs economists report that nearly 300 million full-time jobs are at risk due to AI-driven automation. According to McKinsey, by 2030, Generative AI could automate up to 30% of current work hours across Europe and the United States. Both emphasise that businesses will require a significant upgrade in skills, as the integration of AI will increase the demand for social and emotional skills, as well as critical thinking and creativity.

Insights from EY suggest that while the impact of AI on emerging economies is less pronounced compared to advanced economies, approximately 57% of occupations in these countries could still be affected by the growing adoption of generative AI.

Also read: Economic Survey 2025 projects India’s insurance sector to grow fastest among G20 nations in 5 years

How will AI Affect India?

An IIM Ahmedabad survey reveals that 68% of white-collar workers anticipate their jobs will be partially or fully automated by AI within the next five years. Additionally, 40% believe that AI will render their skills obsolete. Research by Copestake indicates that firms have significantly increased the demand for AI skills across various regions, industries, and occupations. Their findings show that these AI-related jobs offer a salary premium of 13% to 17% above baseline estimates.

In India’s banking sector, larger and well-capitalised banks are also embracing AI, as highlighted in a recent RBI study. With trends pointing towards even greater AI adoption in the private sector, NASSCOM projects that the Indian AI market will grow at a compound annual growth rate (CAGR) of 25% to 35% by 2027.

“If companies do not optimise the introduction of AI over a longer horizon and do not handle it with sensitivity, the demand for policy intervention and the demand on fiscal resources to compensate will be irresistible,” the report adds.

The intervention could be in the form of tax on profits generated from the replacement of labour with technology.

“[Intervention] will leave everyone worse off and the country’s growth potential will suffer, as a result,” the report adds.

Also read: Government should get out of the way of business, says India’s Chief Economic Advisor