Increase In AI Intensity By One Unit Can Result In 2.5 Per Cent Increase In GDP: ICRIER

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  • This study had used investments in software, databases and computer machinery as a proxy for AI and has measured AI intensity as the ratio of AI to total sales of the firm
  • The report also recommended policy measures to support AI’s wider adoption in India

A unit increase in artificial intelligence (AI) intensity, measured as the ratio of AI investments to total sales, can result in a 2.5 per cent increase in India’s GDP in the immediate term as per a report by think tank ICRIER. This study had used investments in software, databases, and computer machinery as a proxy for AI and has measured AI intensity as the ratio of AI to total sales of the firm.

The report by Nasscom, ICRIER, and Google named Implications of AI on the Indian Economy said that to bring out a positive growth shock, AI intensities should be sharply increased. Amitabh Kant, CEO, NITI Aayog said. Amitabh Kant, CEO, NITI Aayog said Artificial Intelligence has become a strategic lever for economic growth across nations. It will continue to be one of the most crucial technologies of the future. He added that by integrating new technologies like AI and ML into various sectors, one can radically leapfrog and catch up with advanced economies.

Policy measures to support AI’s wider adoption in India

The report also recommended policy measures to support AI’s wider adoption in India. It included identifying a nodal agency for the development and diffusion of AI, building collaborative frameworks for engagement between governments, industry, and academia. It also included building a data strategy for India and solving India’s skill gap in AI among others.

Rajat Kathuria, director and CE, ICRIER said that the government has an active role to play in creating institutions and providing public goods that enable India’s AI ecosystem. It also has to encourage private actors to innovate and thrive. He added that the vast impacts of AI and the current circumstances combine to merit mission mode action of AI programs across sectors, by government at all levels. He added that this will help overcome the inherent market failure evident in early phases of any technology.

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