Budget 2026 key priorities: Skilling youth for an AI-ready future

India is the youngest nation in the world with about 65% of the population under the age of 35. This means we are home to about 950 million youth, more than three times the total population of Indonesia.

As a nation we bear the responsibility of shaping the future of a large young population in an era where training an AI agent is much faster than training a human and when AI is significantly and rapidly transforming the nature and quantum of jobs for freshers in India.

At the same time, with AI tools we now have access to learning opportunities like never before. Personalised skilling in the language of one’s choice, along with the ability to learn at one’s own pace with customised AI tutors, is now a reality.


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This leads us to an important question: How can we as a nation leverage AI to prepare our young population at scale and speed to survive and thrive in a future dominated by AI?

As a first step, the Government, in its forthcoming budget, can showcase the outcomes of existing initiatives aimed at empowering our youth on AI over the last decade. Measuring the productivity of these initiatives will help identify those that need scaling back or major overhaul. This will help free resources—human as well as monetary—that can be allocated to new and more impactful AI-led initiatives.

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This is important because the Government has been actively embedding AI and digital learning programmes with a range of targeted initiatives under Pradhan Mantri Kaushal Vikas Yojana (PMKVY) 4.0, National Apprenticeship Promotion Scheme (NAPS), Industrial Training Institutes (ITIs), and National Skill Training Institutes (NSTIs) as well as the Skill India Digital Hub (SIDH) platform.

If one were to consider the example of NAPS-2, as noted by the Government, 1,480 apprentices were trained between FY 2022–23 to FY 2025–2026 in AI-related roles such as AI data engineer and machine learning engineer under the scheme. The total allocation for all types of apprenticeships under this scheme during the same period was INR1,942 crore. This points to the need to incentivise employers to train more skilled professionals in AI roles.

As a next step, the Government can consider revising its existing schemes to incentivise the creation of AI-linked employment opportunities. For example, in the second half of 2025, the Government approved the Employment Linked Incentive Scheme that was announced in its FY24–25 budget with an outlay of INR99,446 crore. With a registration period of two years from 1 August 2025 to 31 July 2027, the scheme has two parts. Under Part-A, eligible first timers will receive an incentive equivalent to one completed month EPF wage, capped at a maximum of INR15,000, payable in two instalments. Under Part-B, an incentive up to a maximum of INR3,000 per month per employee is to be provided for creation of additional employment for a sustained period of at least six months subject to the eligibility criteria described in the guidelines.

In the Budget for FY26–27, the Government can nudge businesses to use the benefits of the scheme specifically to employ the youth in AI-related roles within the manufacturing sector. For companies that do so, the incentives under Part-A of the scheme could be enhanced by INR10,000. This would enable businesses, especially micro, small and medium enterprises (MSMEs), to secure the right level of monetary support to attract AI talent. Further, new joiners would benefit from an income standpoint.

Lastly, the Government could also announce new schemes to make novel forms of AI work for the youth population at large. With the GenAI revolution unfolding at a rapid pace, in its forthcoming budget, the Government can launch an initiative wherein apprentices can learn AI/ML concepts in regional languages using GenAI tutors. The initiative can allow them to practice virtually on real datasets sourced from the government and industry and get assessed and certified by intelligent agents on standardised curricula aligned with AI job roles within private and public sector institutions. This will help transform routine apprenticeships into AI-enriched, project-based experiences and rapidly upskill a large number of youth for AI-augmented jobs and not just AI developer roles.

Most importantly, as this initiative scales and matures, it will foster an inclusive, lifelong ‘humaine’ symbiotic learning ecosystem in which AI becomes a teacher and a coach—transcending its role as merely a technological tool.

By measuring what works, tweaking existing incentives, and deploying AI itself as a tutor, we can ensure that our young population is empowered with AI to build a more prosperous Viksit Bharat.

(Raghav Manohar Narsalay is a Partner with PwC India and Leader of its Research and Insights Hub)