GenAI has the potential to propel economic growth

Subir Roy

Senior economic analyst

We are living in the age of high-powered growth of artificial intelligence (AI), which electronically simulates human intelligence. Its most dramatic face, which has taken the world by storm, is generative AI (GenAI). Through its algorithms, trained on vast reserves of data, it produces text, speech, images and videos on demand. If you need a first draft of a speech or if a school student is seeking an easier way to write an essay, GenAI is there to assist you. What is more, if a politician requires tailor-made, authentic-looking video clips for his/her poll campaign, GenAI will oblige.

Seeing AI’s potential, the government has decided to harness the significant software skills within the country to advance AI and, in turn, promote economic growth. The focus will be on key sectors — agriculture, industry, healthcare and FMCG (fast-moving consumer goods). AI is also expected to help revolutionise smart cities, transport systems, supply chains and energy grids that span across various sectors.

In agriculture, AI has been utilised to develop a horticulture trading platform called Praman Exchange, which relies on millions of images in its database to assess the quality of agricultural produce. The underlying notion is that if an apple or onion looks good, it is assumed to be of good quality. An additional advantage is that, being an electronic trading platform, buyers and sellers can bid and respond from anywhere in the country. Launched in 2021, Praman has already achieved an annualised trade value of over Rs 4,000 crore.

In Fintech, the established and successful payment gateway Razorpay uses AI technology. It accepts, processes and disburses payments for individuals and companies for a range of activities, right from booking a cab to ordering food. With $816 million of seed funding, it is now a mature startup. It represents a step forward in using AI to reduce the cost and time taken to make payments and thereby take forward the efficiency of the economy.

Perhaps the most palpable and immediately visible gain from the use of AI is in the field of healthcare. It significantly helps in swift cancer detection; the country’s leading cancer hospital, Tata Memorial, Mumbai, has extensively adopted it. The hospital has fed data from its patients’ radiological and pathological test reports into the computer, enabling it to learn the signs that denote the presence of cancer. When a new patient’s data is entered into the programme, it refers to its databank and immediately determines whether cancer is present. This process is far more efficient, quicker and accurate than a doctor examining the data and making decisions based on his or her experience. The platform’s importance is underscored by its funding from the Department of Biotechnology, IIT-Bombay and AIIMS, New Delhi.

The ubiquitous impact of AI becomes evident when we consider its potential influence on smartphones, which have become indispensable in daily life. In fact, smartphones without GenAI integrated into their operating systems could become obsolete. New-generation phones will be able to predict and respond to queries based on the users’ history. They will anticipate user needs and execute tasks proactively, even before they are asked to do so. Analysing users’ purchasing patterns, the phone might alert them when it’s time to restock the pantry. Upon the user’s confirmation, it could autonomously place the order with a local online store, requiring minimal additional input. Additionally, the phone will be able to perform real-time language translation, a task that currently requires the user to access the Internet.

All these examples illustrate how AI can bring about positive outcomes. However, its most complex face, GenAI, can also be misused. Text generated by GenAI can be presented as original, and fake images and videos can be used to malign people. Hence, there is a need to regulate GenAI, and Europe has already taken the lead in this regard. In India, Nasscom, the body representing the software industry, has issued its own guidelines.

Organisations engaged in the field should have an internal oversight mechanism so as to ensure fair practices. All non-proprietary technical information about the development process as well as data and algorithm stored should be publicly disclosed. When there is a material stake involved in using GenAI, such as in processing consumer credit, explanations should be readily available to outsiders upon request. Regarding the utilisation of non-public information, intellectual property rules should be followed. There should also be a grievance redressal mechanism in organisations using GenAI.

Just as there is keen anticipation over the benefits that AI will bring during the year, there are also apprehensions. Some routine functions in software development, like writing code and maintenance, can be performed more efficiently with the use of AI, thus rendering some IT staffers jobless. However, Tata Consultancy Services, India’s leading software company, believes that by retraining and reskilling the country’s IT workforce, India can position itself at the forefront of the global opportunity for economic growth and job creation. This approach could result in an increase in the number of software jobs compared to the pre-AI era, and these jobs may offer higher salaries. These professionals could play key roles in new business units, such as TCS’s cloud computing setup.

According to a study by global consultancy EY, GenAI can boost India’s GDP cumulatively by $1.2-$1.5 trillion in the next seven years. It can contribute an additional approximately $400 billion to the economy in fiscal 2029-30 over baseline estimates. All this would translate to about 6 per cent rise in the GDP. The gain will come from improved employee productivity, operational efficiency and much better customer engagement.

More than half of the business organisations in the country are already aware of the positive impact AI can have on their businesses. However, only a quarter are ready to go forward with GenAI. The challenge will be to make firms across sectors aware of the boon that GenAI can be for their businesses and encourage them to embark upon this journey. The government’s intervention is crucial in providing public funding to address the skill shortage that businesses will face as they increasingly adopt GenAI on a larger scale.

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