India’s Economic Survey Is Right on AI — and Still Gets It Wrong

India’s Economic Survey is right about one thing and deeply underestimates another. It correctly frames AI not as a prestige technology but as economic infrastructure, something to be deployed where outcomes matter more than optics. Where it stops short is in recognising just how profound this shift is. AI is not a productivity tool in the narrow sense. It is a regime change in how uncertainty is handled inside real businesses. That distinction matters for India because India’s growth constraint has never been talent or demand. It has been volatility, unpredictability, and the resulting high cost of capital.

A useful analogy is the computer. The true economic impact of computers did not come from faster arithmetic. It came from the shift from manual processing to information processing. Entire industries became financeable once information became reliable, timely, and auditable. AI represents the next step in that evolution. It moves economies from information processing to decision processing. When forecasting, scheduling, pricing, underwriting, and quality control stop being artisanal and become systematic, cash flows stabilize. Once cash flows stabilize, lenders behave differently. Investors extend duration. Balance sheets expand. This is where GDP growth actually comes from, not from marginal efficiency gains.

The Survey’s caution is institutionally understandable, but the opportunity is larger than acknowledged. AI will allow capital to flow into Indian manufacturing, logistics, healthcare, hospitality, and MSMEs at a scale previously impossible because risk was too opaque. This is not about replacing jobs or exporting more services in the old sense. It is about making Indian businesses legible to capital. Adoption is inevitable because the economics are overwhelming. India must not treat AI as a defensive regulatory problem. It must embrace it as the most powerful growth unlocking technology it has seen since liberalisation, because doing so is no longer a choice but an economic necessity.

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