AI can turbocharge India's growth despite job disruption: World Bank

New Delhi: Artificial intelligence (AI) has the potential to boost productivity and expand access to services across developing economies, including India, even as it begins to reshape labour markets, according to a World Bank report released on Tuesday.

Developing economies are experiencing their weakest average growth performance in three decades. The report said AI could significantly lift growth before the end of the decade while delivering broad benefits. "AI has thrown developing economies a lifeline, and they should seize it," said Indermit Gill, senior vice president and chief economist of the World Bank Group.

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"They do not need large models or big data centres to reap its benefits. By adapting small, low-cost AI tools to local conditions, they can bring better medical care, education, judicial services and agricultural extension within reach of millions," he said. The report highlighted India as a leading example of AI adoption, citing savings of up to $560 for small farmers in Telangana through AI-based weather forecasts, rising AI activity on GitHub and policy support through the INDIAai Mission.

India has more AI-related activity on GitHub than any developed economy other than the US, the report said. It added that fintech lenders in India and Latin America are using AI-driven credit scoring to extend loans to small businesses and workers without formal banking histories.

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The World Bank said AI could enable developing countries to achieve in a decade what might otherwise take a century, provided governments move quickly to close gaps in power, connectivity, skills and institutional quality. To support AI adoption, governments should make computing infrastructure more affordable for startups, researchers and small businesses, "as India has done through its INDIAai Mission", the report said.

It cautioned that AI is already beginning to affect employment in India. It found that generative AI has reduced monthly job postings in white-collar occupations that are most exposed to AI and least likely to be complemented by it. Overall, generative AI could automate 4.5% of existing jobs across low- and middle-income countries while complementing 16.2%, it said.