Impact of Artificial Intelligence on Economic Growth and Employment in India

Abstract Artificial Intelligence (AI) has emerged as a transformative general-purpose technology with significant implications for economic growth and employment, particularly in emerging economies such as India. This study examines the impact of AI by integrating theoretical perspectives, including Schumpeterian Growth Theory and Skill-Biased Technological Change, with recent empirical evidence. It argues that AI enhances productivity, drives innovation, and contributes to structural economic transformation. In India, AI adoption—supported by initiatives such as NITI Aayog’s AI strategy and the Digital India programme—has led to efficiency gains across sectors including finance, healthcare, and manufacturing. Empirical estimates suggest that AI could add 500–600 billion to India’s GDP, highlighting its role as a key growth driver. Innovations like Unified Payments Interface (UPI) further demonstrate how digital systems can enhance financial inclusion and economic activity. However, AI also reshapes employment by creating high-skill job opportunities while displacing routine and low-skilled work, leading to job polarization and skill gaps. The study concludes that the overall impact of AI depends on effective policy measures in education, skill development, and labor market adaptation to ensure inclusive and sustainable economic growth.