Artificial intelligence sources like ChatGPT can bring benefits to a developing country like India, according to India’s chief economic advisor V Anantha Nageswaran. He acknowledged the valid concern regarding the impact of ChatGPT on employment, but he also highlighted the positive aspects. 

“It (impact of ChatGPT on employment) is a valid concern. It is something that the world will be finding answers as this is the beginning. At this point, it can also be a positive source of growth for India. If these sources of AI increase the productivity of workers, and a company can do with assigning less number of people to a project, it also means they can take on far more projects than earlier. It can be a win-win proposition provided we are able to upskill our people to take advantage of these new tools, interventions, and innovations,” he said in an interaction with Bharat Chambers of Commerce in Kolkata.

The Economic Survey has estimated a GDP growth of 6.5 per cent in FY24, with additional contributions of 0.5-0.8 per cent from capital investments and digital transformation, potentially reaching 7 per cent. Nageswaran emphasised that investment and consumer momentum, along with the government’s capital expenditure push, will bolster solid growth prospects. Furthermore, the expansion of public digital platforms, PM Gatishakti, logistics policies, and PLI schemes will enhance manufacturing output. However, geopolitical uncertainty and tightened financial conditions remain challenges to the growth outlook.

Regarding the estimates for April-June growth, Nageswaran stated that high-frequency indicators indicate a promising start to the quarter. The previous consumption slowdown induced by the pandemic is now a thing of the past. Positive Kharif prospects, combined with ample availability of inputs, are driving rural demand through construction sector growth, MSP increase, and MNREGA demand.

While uncertainties surrounding monsoons persist due to El Nino conditions, historical data suggests that not all El Nino years have resulted in drought. Furthermore, water storage in reservoirs is currently 24 per cent above the decade average.

Despite facing geopolitical headwinds, the Index of Industrial Production (IIP) and the index of eight core industries in India show signs of revival. Nageswaran expressed confidence in the corporate and banking sectors’ readiness to expand, creating employment opportunities. Banks are sufficiently capitalised for lending purposes, and investment activity is picking up due to strengthened balance sheets. The rise in capital goods imports is seen as a positive sign.

Nageswaran shared that a hotel association reported employment figures of 4 crores before the pandemic, 2.9 crores during the pandemic, and a promising 4.5 crores post-pandemic. The current total unemployment rate stands at 6.8 per cent, a significant improvement from the 20 per cent observed during the pandemic.

While concerns exist regarding exports due to global headwinds, Nageswaran mentioned that a surplus in services trade will help limit the current account deficit. He expects the deficit to be capped at 2 per cent of GDP.

The chief economic advisor also highlighted the rise in foreign institutional investments (FIIs) in 2023 and noted that foreign direct investment (FDI) amounting to $600 billion will cover 10 months of imports.

The recent GDP estimate for FY23 in India suggests a growth rate of 7.2 per cent, higher than the previous estimate of 7 per cent. Nageswaran expressed confidence that by the time the final estimate is released in FY26, the growth figure for FY23 would surpass 7.2 per cent.

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