Dr. Rahul Kundal
As Artificial Intelligence (AI) reshapes industries and social systems, India stands at a critical juncture. Recognised as a future AI powerhouse and lauded for its human development progress, the country now faces an essential question: Will AI serve as an engine of inclusive growth, or will it widen the gaps we’ve struggled to narrow?
The Human Development Report (HDR)2025 highlights the urgency of this dilemma. It calls for a revived interest on human agency and inclusion, urging policymakers to balance technological progress with fair planning. For India, which has made notable strides in health, education, and poverty reduction, this is more than an academic question. It’s about how we build a future where rather than replacing human potential, AI strengthens it.
India ranks 130th out of 193 countries on the Human Development Index (HDI), an improvement from 133rd the previous year. Life expectancy has risen from 58.6 years in 1990 to 72 today. Average years of schooling and per capita income have also grown significantly. According to NITI Aayog, over 248 million people exited multidimensional poverty between 2013-14 and 2022-23. These gains reflect decades of economic expansion and social investments-from Ayushman Bharat to Samagra Shiksha Abhiyan. But in a world shaped by automation, digital exclusion, and rising inequality, such progress remains fragile.
On the technology front, India is gaining momentum. The Stanford AI Index 2025 ranks India 4th globally for AI development, which is remarkable for a lower-middle-income country. For the first time, 20% of India’s AI researchers are staying in-country, a sign of growing domestic capacity. AI is already transforming sectors-from predictive crop advisory services in regional languages to AI-enabled diagnostics in healthcare. If scaled equitably, such technologies could become game-changers for India’s development story.
That said, progress is not evenly distributed. India’s AI ambition clashes with the reality of stark digital divides, between urban and rural, rich and poor, male and female. Reliable internet access and basic digital literacy are far from universal. The same HDR notes that India’s HDI value drops by 30.7%, when adjusted for inequality, which is among the steepest declines in Asia. Female labour force participation and political representation remain dismally low. Unless built inclusively, AI may end up serving the few, not the many.
The threat of job displacement looms especially large in India’s vast informal sector, which employs over 90% of the workforce. AI may create new kinds of employment, but it will also render some traditional roles obsolete, often the very jobs that keep vulnerable communities afloat. Layered onto this is a host of ethical dilemmas, including algorithmic bias, opaque decision-making, and data privacy violations. Operating in a regulatory vacuum, we risk building systems that replicate and reinforce existing inequalities, only at machine speed.
There is an urgent need to place people at the centre of AI policy. India needs an AI strategy that prioritises ethics, fairness, and the well-being of its people, ensuring that technology serves development, not the other way around. This means designing systems that are transparent, just, and accountable. Digital access must become a basic right, as it has in Finland and Estonia. Investing in equitable digital infrastructure beyond urban tech hubs is non-negotiable. Public-private partnerships can play a key role, but they must be guided by public interest, not profit alone.
Upskilling the workforce is also urgent. From the codebase to the clinic, everyone needs to learn how to work with AI, without losing sight of what makes us human. The National Education Policy 2020 and the Skill India Mission must evolve to meet this moment. At the same time, we need aregulatory framework with real power to enforce accountability. Privacy laws, algorithmic assessments, and ethical AI guidelines must move from discussion papers to binding regulations. Still under development, the Digital India Act could be a watershed, if it remains anchored in democratic values.
AI offers India a powerful lever for development, but it is no silver bullet. If handed over entirely to the market and allowed to run unchecked, it could deepen structural divides and outsource exclusion to machines. But when harnessed intentionally, it can unlock breakthroughs.
AI’s developmental promise becomes meaningful when it is embedded in public systems and aligned with people’s everyday needs. Telangana’s use of AI-powered crop forecasting supports small farmers by offering timely, localised advice that improves decision-making. In Odisha, AI-supported early warning systems have strengthened disaster preparedness and helped reduce loss of life during cyclones and floods. Karnataka has begun using AI tools in government hospitals to assist with early disease detection, particularly in districts with limited specialist care. Kerala’s experiments with AI-based learning platforms in public schools aim to narrow learning gaps, while states such as Andhra Pradesh and Rajasthan are using data analytics to improve welfare delivery and reduce administrative delays. Taken together, these experiences suggest that AI can strengthen health, education, and human security when it is treated as a public good rather than a tool that benefits only a few.
India stands at a decisive moment. The question is no longer whether to embrace AI, but whether we will shape itor be shaped by it. The real danger is not that machines will outsmart us, but that we may trade away our values in pursuit of efficiency. As AI ethicist Timnit Gebru warns, “The problem is not the technology itself, but the values of those who design and deploy it.”
India’s AI journey must be grounded in justice, not just innovation. To build a Viksit Bharat, India must balance speed with inclusion and choose the harder path of equitable integration, where AI isn’t used to bypass inclusion, but becomes a tool to deepen it. Why does this matter? Because in the age of intelligent machines, what counts most is not how smart our tools are, but how fair our societies remain.
(The writer is an Assistant Professor in Post-Graduate Department of Economics, University of Kashmir)