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AI can add 2.5% to GDP with policy push, investment: NASSCOM

Rukmini Rao     July 27, 2020

With coronavirus-led disruption accelerating the adoption of artificial intelligence (AI) and automation, a report released by the IT industry body NASSCOM says that a unit increase in AI intensity (measured as the ratio of AI to total sales) can return up to $67.25 billion or 2.5 per cent  to the Gross Domestic Product (GDP) to the Indian economy.

According to the report titled, 'Implications of AI on the Indian Economy' by NASSCOM along with Google and ICRIER,  though business as usual growth in AI investments is unlikely to increase current levels of AI intensity, moves such as the recent investment of Rs 7,000 crore approved by the Ministry of Finance towards an Artificial Intelligence program could help to a great extent. Such an increase in investment could approximately increase the AI intensity by 1.3 times, resulting in benefits of $85.77 billion or 3.2 per cent of the GDP. "In hopes to accelerate growth and pave a path towards innovation, Artificial Intelligence has a definite role to play in empowering industries, infrastructure and the society at large," said Debjani Ghosh, President, NASSCOM.

With the private sector betting big on AI in India, AI startups have seen an increase in funds and also the rounds of funding. As per estimates, Indian AI market for start-ups attracted $762.5 million in 2019, the report said. However, globally, India is far behind in AI adoption. For instance, International Federation of Robotics says  Indian robot density in the automotive sector is 85 industrial robots per 10,000 employees compared to 505 per 10,000 employees in China. The report states that though companies recognise the benefits and potential of AI, concerns related to cost and the doubts on return on investments in AI are acting as a deterrent. However, once AI goes mainstream its positive impact would become more noticeable in GDP. With the need of the hour for a close collaboration between government, industry and academia, Sanjay Gupta, Country Head & VP, Google India says that there is no doubt that with close collaboration between the private and public sector, and by focussing our collective expertise and energies on the most pressing problems of today, we will go a long way towards achieving the vision of a socially empowered, inclusive, and digitally transformed India.

With AI adoption likely to have a larger impact on the socio- economic and employment aspects of the country, the report also recognises the  role of the government  in creating institutions and providing public goods that enable an AI ecosystem, while also encouraging private  sector innovation. Some of the key recommendations include identifying a nodal agency within the government for development and diffusion of AI- its design and workings, adoption of AI-based governing, building a complete data strategy to improve state capacity to provide AI-compatible publicly available data and encourage unbiased, reliable, safe and inclusive data sharing practices and exploring ways for India to enhance its participation in the AI standardisation process.

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