India might Tax Companies Cutting Jobs Due to AI: CEA Highlights Balancing AI Benefits and Social Costs
Chief Economic Adviser V Anantha Nageswaran highlighted that while AI presents unprecedented opportunities for economic growth, it also poses significant challenges for a labor-rich country like India
Tax Companies – AI – AI Benefits and Social Costs – V Anantha Nageswaran – Taxscan
Tax Companies – AI – AI Benefits and Social Costs – V Anantha Nageswaran – Taxscan
The Economic Survey 2024-25, tabled in Parliament by Finance Minister Nirmala Sitharaman, has raised concerns over the impact of artificial intelligence (AI) on India’s job market, emphasizing the need for a balanced approach to harness AI’s benefits while mitigating its social costs.
Chief Economic Adviser V Anantha Nageswaran highlighted that while AI presents unprecedented opportunities for economic growth, it also poses significant challenges for a labor-rich country like India. He further stated that companies reducing employment opportunities due to AI adoption could face taxation as a measure to address the adverse social impacts.
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The Survey underscores the growing anxieties surrounding AI’s potential to disrupt job markets globally. Citing examples such as global banks planning to cut up to 200,000 jobs over the next three to five years and tech giant Salesforce halting engineering hires due to AI-driven productivity gains, the document stresses the need for robust institutions to manage this transition. “Policymakers must remain mindful of the evolving technological landscape and its potential impact on the labor market,” the Survey noted.
India, with its demographic advantage and diverse economic landscape, is uniquely positioned to benefit from AI. However, the Survey warns that realizing these benefits will require significant investments in education and workforce skills. Enabling institutions, insurance mechanisms, and safety nets will be critical to helping workers adapt to changing demands and ensuring equitable outcomes.
The Survey draws parallels with earlier technological revolutions, emphasizing the role of institutions in managing disruption. It calls for a proactive approach to minimize AI’s adverse effects on employment, suggesting that companies displacing workers due to AI could face taxation. This measure aims to balance the economic benefits of AI with its social costs, ensuring that technological advancements do not come at the expense of job losses.
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As India navigates the AI revolution, the Economic Survey 2024-25 serves as a timely reminder of the need for a balanced and inclusive approach. By investing in R&D, creating safety nets, and implementing policies like AI-related taxation, India can harness the potential of AI while safeguarding its workforce and ensuring sustainable economic growth.
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