Author : Soumya Bhowmick

Expert Speak Digital Frontiers
Published on Apr 24, 2023
AI and India's youth capital: A high-tech romance

The Economics of Technological Progress

The powerful advent of Artificial Intelligence (AI) with the current usage in OpenAI chatbot ChatGPT has created a stir across sectors. Only two months after its launch, the newest crown to the tech world reached about 100 million monthly active users in January 2023. Such labour-augmenting scientific innovations take us back to the 1956 Solow-Swan model of exogenous economic growth, as to how modern-day AI can increase the rate of technological progress and productivity growth in the long run. This could happen through improving the quality and quantity of output, leading to higher per capita GDP, or contributing to research and development (R&D), which can create new technologies that advance productivity rates. Figure 1: Technological Changes in Solow-Swan Growth Model Source: Sredojević et. al. (2016) 
(Notes: y is output per worker; k is capital-to-labour ratio; d is depreciation; and n is population growth)

What does this mean for India's youth?

According to estimates by the World Population Review (WPR), this year is poised to be significant for the South Asian subcontinent. By mid-January 2023, India became the world’s most populous country, surpassing China (a population of 1.417 billion compared to China's 1.412 billion). This has shifted the international focus to New Delhi's potential to effectively utilise its vast human resources, especially the young population, to bolster its domestic economy and emerge as a prominent global player. With over 52 percent of its population under the age of 30 and a high internet penetration rate of 43 percent, India holds tremendous potential within the Fourth Industrial Revolution (4IR). < style="background-color: #ffff00">Advancements in tech domains such as AI, data security, data processing and transfer, and DNA editing complement the productivity across economies, especially for the young, and transform nations' domestic and international policies. Therefore, an urgent need is to invest effectively in areas that will benefit the youth and enable sustained socioeconomic progress. Health and Education are two of the essential elements in human capital investment. By investing in these areas, India can develop a skilled and healthy workforce to drive economic growth and promote the UN Sustainable Development Goals (SDGs), especially SDG 3 (Good Health and Well-being) and SDG 4 (Quality Education). Table 1: SDG Indicators with direct impacts on the youth population
Human Capital-Inducing SDGs Key Youth-Impacting Indicators Indicative Statistics
SDG 3 aims to 'ensure healthy lives and promote well-being for all at all ages.' The indicators that affect the youth population include 'maternal mortality ratio'; neonatal mortality rate'; 'number of HIV-positive cases'; and 'mortality rate attributed to cardiovascular diseases'. The average number of deaths in 2018 was 1.827 million dropping to 17.739 million in 2019. The number of 'under-5 deaths' that took place in India stood at about 1 million.
SDG 4 aims to 'ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.' The available youth-related indicators measure the 'proportion of children and young people that achieve a minimum proficiency in reading and mathematics, by sex', 'participation rate of youth and adults in non-formal and formal education and training in the past 12 months', 'completion rate by sex, location wealth quintile and education level in percentage'. As of 2019, the world education completion average stood at 60.62 percent compared to 2018's average of 61.34 percent. Among the Commonwealth nations, Cyprus has the highest ratio of youth who have completed their education at 95.23 percent, followed by the United Kingdom at 94.17 percent.
Source: Observer Research Foundation (2022) < style="background-color: #ffff00">Young people should have access to dynamic learning opportunities and investments in foundational and core work skills to embrace evolving digital opportunities fully. Firstly, with 1.2 million students out of school (mostly at the elementary level), the quality of education remains a significant challenge for India. < style="background-color: #ffff00">AI can help address this issue by providing personalised learning experiences, and chatbots can provide students with instant feedback and support, allowing them to learn at their own pace. In addition, AI-powered adaptive learning platforms can also help identify areas where students struggle and provide targeted support.
AI-powered medical applications can help provide timely diagnoses and treatment recommendations.
< style="background-color: #ffff00">Secondly, AI can improve health outcomes by mitigating India's low doctor-patient ratio, especially in rural and remote areas. Moreover, AI-powered medical applications can help provide timely diagnoses and treatment recommendations. For example,, a Mumbai-based startup, has developed an AI-powered medical imaging platform that can detect abnormalities in medical scans with high accuracy. AI technology has also played a crucial role in combating the COVID-19 pandemic in India; it has been utilised for preliminary screening of COVID-19 cases, contact tracing, enforcing quarantine and social distancing, treatment and remote monitoring of COVID-19 patients, and vaccine and drug development.

To Fear AI or Not? 

< style="background-color: #ffff00">The importance of governments, employers, workers, and youth in shaping skills development policies and their implementation cannot be overstated, particularly considering the opportunities and challenges presented by emerging technologies in the future of work. For example, one of the main concerns with AI is the potential medium-term unemployment due to automation. It is estimated that approximately 69 percent of the jobs in India will be under threat due to automation in 20 years. In addition, the disparity in tech skills between urban and rural populations, minority groups, and across age cohorts could exacerbate the economic inequalities, leading to social unrest if appropriate measures are not taken to reskill and upskill workers. < style="background-color: #ffff00">Another concern is that AI-powered systems can perpetuate existing biases and discrimination, particularly against marginalised groups such as ethnic minorities, women, and people with disabilities. This could further exacerbate existing inequalities and hinder progress towards the social capital aspect of the SDGs. < style="background-color: #ffff00">Additionally, using AI in sensitive areas such as healthcare, national safety, and law enforcement raises concerns about privacy and security. For example, AI-powered medical devices and applications may collect sensitive personal data, and the misuse of this data could have serious consequences.
The disparity in tech skills between urban and rural populations, minority groups, and across age cohorts could exacerbate the economic inequalities, leading to social unrest if appropriate measures are not taken to reskill and upskill workers.
For India, fast-track skilling initiatives will be essential in order to arrive at demand-supply equilibria in such tech-driven labour markets. It will not only enable an entire generation of livelihood opportunities, but also make the youth suitable for job markets worldwide. The Indian government has taken several initiatives to promote AI use, including establishing an Artificial Intelligence Task Force and formulating NITI Aayog's National Strategy for Artificial Intelligence #AIFORALL. Additionally, the Ministry of Electronics and Information Technology and various state governments have taken up various AI endeavours. With the cautious implementation of initiatives in this domain, India can create a skilled workforce capable of meeting the demands of a rapidly evolving global economy, contributing to more significant economic growth and sustainable development.
NB: This piece has been written using OpenAI GPT-3.5 (ChatGPT 3.5) as a research tool. The portions assisted by ChatGPT have been highlighted. Soumya Bhowmick is an Associate Fellow at the Centre for New Economic Diplomacy, Observer Research Foundation
<1> OpenAI GPT-3.5
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.


Soumya Bhowmick

Soumya Bhowmick

Soumya Bhowmick is an Associate Fellow at the Centre for New Economic Diplomacy at the Observer Research Foundation. His research focuses on sustainable development and ...

Read More +