Generative AI to transform India's economy, says McKinsey
The recent surge in generative AI technologies is set to affect India's economic landscape, with significant implications for various sectors. A report from consulting firm McKinsey & Company shows how India could benefit from generative AI's $4.4 trillion global economy.
AI tools have the potential to automate menial tasks that take up to 70% of employees’ time today. In fact, McKinsey’s report estimates that AI and robotics could automate up to 50% of all work by 2060. These changes are expected to be seen to larger degree in sectors like sales, marketing, software engineering, and product research and development.
According to the analysis, developing countries with lower wage rates, including India, China, and Mexico, are expected to adopt Generative AI technologies at a slower pace compared to higher-earning countries.
India’s Ministry of Electronics and IT recognizes AI as a kinetic force in the digital economy, enabling personalised citizen-centric services through digital platforms.
However, the report also warns that automation could displace certain service jobs, necessitating support for workers to learn new skills and undergo occupational changes. This impact will too be felt across higher-wage employees, which was previously considered to be relatively immune from automation, because of advances in high-level technical automation.
McKinsey & Company notes that despite the estimate that much of today’s work activities will be automated by 2030 and to a larger extent by 2060, highly sought after jobs in India, such as architecture or consultancy, will still be largely dependent on highly skilled workers.
The rapid adoption of generative AI and other cutting-edge technologies promises to propel a significant increase in productivity. The report estimates that the automation of individual work activities enabled by these technologies could provide the global economy an annual productivity boost of 0.2% to 3.3% by 2040.
Generative AI is reshaping the retail and ecommerce industries in India. AI algorithms are being used by startups to analyse customer behaviour, predict purchasing patterns, and deliver personalized product recommendations. India’s ecommerce sales are estimated to reach $200 billion by 2026.
Some traditional sectors are also benefitting from AI’s recent rise in popularity. Heathcare in India has already seen significant advancements driven by generative AI startups and is projected to reach $335 million by 2024. And just last year, investments in AI-powered fintech firms in India broke through the $300 million mark.
