Economic Survey Warns of AI’s Impact on Middle- and Lower-Income Jobs

The Economic Survey 2025 warns that AI could displace middle- and lower-income workers, particularly in India’s service-oriented economy. To counter this, policymakers must invest in social infrastructure and workforce upskilling. The report advocates an Augmented Intelligence model, where AI enhances human potential rather than replacing jobs.

The Economic Survey 2025 has raised concerns about the potential displacement of middle- and lower-income workers due to Artificial Intelligence (AI). While AI promises to revolutionise industries by automating economically valuable work, it also poses risks of large-scale labour displacement as it surpasses human decision-making in sectors such as healthcare, finance, research, and education.

The survey compared AI’s disruptive potential to previous industrial revolutions, which led to economic hardships, unemployment, and widening income inequality. Given India’s service-driven economy, particularly its IT sector, many low-value-added jobs are vulnerable to automation. Policymakers must take this challenge seriously and implement measures to mitigate the negative impact of AI adoption.

The report emphasised the need for social infrastructure—including enabling, insuring, and stewarding institutions—to help transition workers into medium- and high-skill jobs where AI can augment rather than replace human efforts. Establishing such institutions requires significant financial and intellectual investment, but India has time to prepare, as AI still faces challenges in scalability, reliability, and efficiency.

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By leveraging its young and tech-savvy workforce, India can integrate AI in a way that enhances productivity rather than eliminating jobs. The survey advocated for an "Augmented Intelligence" model, where AI complements human labour rather than replacing it entirely. Policymakers and corporations must work together to balance innovation with social stability, ensuring inclusive economic growth.