Minor Project - II

On
“The impact of artificial intelligence on the Indian job market and the
readiness of the system”

Submitted in Partial Fulfillment of the requirement for the

Award of the Degree of
Bachelor in Business Administration (General)

Supervisor: Submitted By:

Dr. Shailza Dutt Student Name: Devansh Awasthi
Assistant Professor Section: B
Enrollment No: 9314901721

BATCH 2021-2024

DEPARTMENT OF BUSINESS ADMINISTRATION

Maharaja Surajmal Institute

Recognized by UGC u/s 2(f), NAAC Accredited ‘A’ Grade
Affiliated to Guru Gobind Singh Indraprastha University, Delhi C-
4, Janakpuri, New Delhi-110058
 CERTIFICATE

I, Mr Devansh Awasthi, Roll No. 09314901721 certify that the Minor Project Report (BBA

218) entitled “The impact of artificial intelligence on the Indian job market and the readiness

of the system” is done by me and it is an authentic work carried out by me. The matter embodied

in this has not been submitted earlier for the award of any degree or diploma to the best of my

knowledge and belief.

Signature of the Student

This is to certify that the Project Report entitled “The impact of artificial intelligence on the Indian

job market and the readiness of the system” which is submitted by Devansh Awasthi in partial

fulfilment of the requirement for the award of degree Bachelor in Business Administration to

Maharaja Surajmal Institute Affiliated to Guru Gobind Singh Indraprasth University, C-4,

Janakpuri, New Delhi-110058 is a record of the candidate own work carried out by him under

my supervision. The matter embodied in this report is original and has not been submitted for the

award of any other degree.

Signature of the Guide

Name of the Guide: Dr. Shailza Dutt

Designation: Assistant Professor

-1-
 ACKNOWLEDGMENT

Project work is never the accomplishment of an individual rather it is an amalgamation of the efforts,

ideas and co-operation of a number of entities.

I would like to thank GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY for giving

an opportunity to work on a valuable project.

The completion of the project study that follows, seemed to be a distant goal had it not been for the

contribution of Dr. Shailza Dutt for allowing me to work on a very intrinsic part on “The impact

of artificial intelligence on the Indian job market and the readiness of the system”. I thank her

for the ideas and basic concepts she delivered and shared with me, as they helped me a lot in

accomplishing this project of mine.

Signature of the Student

-2-
 CONTENT

Chapter Chapter Name Page

No. No.

Certificate -1-

Acknowledgement -2-

Content -3-

List of Tables -4-

List of Figures -5-

1. Chapter-1: Introduction 1

Objective of the Study 17

Importance of the Study 18

Literature Review 22

Research Methodology 24

Scope of Study 27

Limitations of the Study 30

2. Chapter-2: Conceptual Framework 32

3. Chapter-3: Findings, Analysis and Interpretation 46

4. Chapter-4: Conclusion and Recommendation 60

Bibliography 64

-3-
 LIST OF TABLES

Table Table Name Page

No. No.

1 Employment Data in India 12

2 Urbanization of India 29

3 Job Loss to Automation by 2030 in Major Economies 50

-4-
 LIST OF FIGURES

Figure Figure Name Page

No. No.

1 Figure 1: Branches of Artificial Intelligence 2

2 Figure 2: Timeline of AI Development 7

3 Figure 3: Unemployment Rate in India 16

4 Figure 4: The Imitation Game Diagram 38

5 Figure 5: Percentage of Jobs Divided by Category in India 39

6 Figure 6: Organization of Labour Market 41

7. Figure 7: Unemployment Rate in India 45

8. Figure 8: Job Loss to Automation by 2030 in Leading Economies 48

-5-
CHAPTER-1

1
INTRODUCTION

Introduction to Artificial Intelligence

Artificial Intelligence (AI) is a rapidly evolving field at the forefront of technological

advancements that aims to create intelligent machines capable of emulating human cognitive

abilities. It encompasses a wide range of methodologies and techniques, enabling computers to

perceive, reason, learn, and make decisions in ways that simulate human intelligence.

At its core, AI seeks to replicate human-like intelligence by designing algorithms and systems that

can process vast amounts of data, extract meaningful patterns, and adapt to changing

circumstances. By mimicking human thought processes, AI enables machines to perform tasks that

traditionally require human intelligence, revolutionizing numerous industries and transforming the

way we live and work.

Figure 1: Branches of Artificial Intelligence

2
AI can be classified into two main categories: narrow AI and general AI. Narrow AI, also known

as weak AI, refers to systems that are designed to perform specific tasks with high proficiency,

such as voice recognition, image classification, or recommendation algorithms. General AI, on the

other hand, embodies the concept of creating machines capable of understanding, learning, and

applying knowledge across various domains, rivaling human intellectual capabilities.

The development of AI relies on several fundamental building blocks, including machine learning,

natural language processing, computer vision, robotics, and expert systems. Machine learning, a

subset of AI, empowers systems to automatically learn and improve from experience without

explicit programming. This technique has enabled breakthroughs in areas like autonomous

vehicles, virtual assistants, and fraud detection.

Natural language processing enables machines to understand and generate human language,

facilitating communication between humans and computers. Computer vision focuses on enabling

machines to interpret and understand visual information, opening up possibilities in areas like

facial recognition, object detection, and medical imaging.

Robotics, another vital component of AI, involves the design and construction of physical

machines capable of interacting with their environment. These intelligent robots can perform

complex tasks, ranging from automated manufacturing processes to exploration in hazardous

environments.

Expert systems, or knowledge-based systems, leverage vast databases and rule-based reasoning to

simulate human expertise in specific domains. These systems excel in areas like medical diagnosis,

financial analysis, and customer support, offering fast and accurate decision-making capabilities.

3
The widespread adoption of AI has brought both excitement and concerns. On one hand, AI has

the potential to enhance productivity, improve healthcare outcomes, revolutionize transportation,

and optimize energy consumption. On the other hand, ethical considerations regarding privacy,

job displacement, algorithmic bias, and the responsible use of AI technology have emerged as

significant concerns.

History of Artificial Intelligence

Artificial Intelligence (AI) is a field of study and technology that aims to develop machines capable

of performing tasks that would typically require human intelligence. It encompasses various

subfields such as machine learning, natural language processing, computer vision, and robotics.

AI has become a ubiquitous presence in today's society, revolutionizing industries, powering

digital assistants, driving autonomous vehicles, and shaping the way we live and work.

The origins of AI can be traced back to ancient times when the concept of artificial beings and

intelligent machines fascinated philosophers and inventors. However, the formal study of AI as a

scientific discipline began to take shape in the mid-20th century. It was during this time that

pioneers and visionaries laid the foundation for what would become a transformative force in the

world of technology.

In 1956, a group of scientists, including John McCarthy, Marvin Minsky, Nathaniel Rochester,

and Claude Shannon, organized the Dartmouth Conference, marking the birth of AI as a formal

academic discipline. The conference aimed to explore the possibilities of creating machines that

could simulate human intelligence. This event sparked tremendous enthusiasm and optimism about

the future of AI, and it became a catalyst for further research and development.

4
During the 1950s and 1960s, researchers focused on developing AI programs and algorithms. Early

breakthroughs included programs that could play chess or prove mathematical theorems. However,

progress in AI proved to be more challenging than initially anticipated. The ambitious goals set by

early researchers often outpaced the available computing power and the limitations of the time.

The 1970s and 1980s witnessed a period known as the "AI winter," marked by disillusionment and

reduced funding for AI research. The initial hype surrounding AI had created unrealistically high

expectations, and when progress fell short, interest waned. However, despite the setback, AI

research continued, and significant advancements were made in areas such as expert systems and

pattern recognition.

In the 1990s, AI experienced a resurgence with the emergence of new techniques and approaches.

Machine learning, particularly neural networks, gained attention and led to breakthroughs in areas

such as speech recognition and image classification. The availability of larger datasets and more

powerful computers propelled the development of AI systems capable of learning from vast

amounts of data.

The 21st century has witnessed exponential growth in AI applications and capabilities. Advances

in computing power, the advent of big data, and breakthroughs in algorithms, particularly deep

learning, have fueled a new wave of AI innovation. From virtual assistants like Siri and Alexa to

self-driving cars and recommendation systems, AI has become an integral part of our daily lives.

As AI continues to evolve, new challenges and ethical considerations arise. Discussions about the

impact of AI on employment, privacy, and ethics have become crucial in shaping the future

direction of AI development. Striking the right balance between technological advancement and

5
 responsible deployment remains a significant focus for researchers, policymakers, and society as

a whole.

Timeline of Artificial Intelligence

I. 1950s: The birth of AI as a formal academic discipline with the Dartmouth Conference and

the exploration of machine intelligence.

II. 1956-1974: The initial enthusiasm and optimism for AI research, with early breakthroughs

in programs that played chess or proved mathematical theorems.

III. 1970s-1980s: The AI winter, a period marked by reduced funding and decreased interest

due to unmet expectations and challenges faced in AI development.

IV. 1980s-1990s: The resurgence of AI with advancements in expert systems, pattern

recognition, and the emergence of machine learning techniques like neural networks.

V. 1997: IBM's Deep Blue defeats world chess champion Garry Kasparov, showcasing the

power of AI in strategic decision-making.

VI. 2000s: Rapid growth in AI applications, fueled by improvements in computing power,

availability of big data, and breakthroughs in algorithms, particularly deep learning.

VII. 2011: IBM's Watson wins the game show Jeopardy!, demonstrating AI's ability to process

natural language and provide accurate answers.

VIII. 2014: Deep learning techniques achieve breakthrough performance in image and speech

recognition tasks.

IX. 2016: AlphaGo, developed by DeepMind, defeats the world champion Go player,

illustrating AI's ability to master complex games.

6
 X. 2017: AI-powered virtual assistants, such as Amazon's Alexa and Apple's Siri, become

widely adopted, transforming the way we interact with technology.

XI. 2020s: Continued advancements in AI across various domains, including healthcare,

finance, autonomous vehicles, and robotics, leading to significant societal impact.

Figure 2: Timeline of AI development

Timeline Highlighting Key Developments in AI That Have Posed Risks to Jobs

I. Late 1990s: The rise of automation in manufacturing industries, with the introduction of

robotic systems that could perform repetitive tasks more efficiently than human workers.

7
 II. Early 2000s: Advancements in machine learning and natural language processing lead to

the automation of customer service tasks, such as call center operations and online chat

support.

III. Mid-2000s: The introduction of machine learning algorithms and AI-driven

recommendation systems in e-commerce platforms begins to impact traditional retail jobs

as online shopping gains popularity.

IV. 2010: The emergence of autonomous vehicles and the potential for self-driving cars

threatens jobs in the transportation and logistics industries, including truck driving and

delivery services.

V. 2011: IBM's Watson showcases its ability to analyze vast amounts of data and provide

accurate answers, raising concerns about the future of knowledge-based professions such

as law and healthcare.

VI. 2014: The development of AI-powered chatbots and virtual assistants starts to impact jobs

in customer service and support roles, particularly in the service industry.

VII. 2017: Automation technologies, including AI and robotics, increasingly replace jobs in

various sectors, including manufacturing, retail, and food service, contributing to the

growing concern of job displacement.

VIII. 2018: AI-powered algorithms and machine learning systems are utilized in the financial

industry, impacting jobs in areas such as stock trading, investment analysis, and fraud

detection.

IX. 2020: The COVID-19 pandemic accelerates the adoption of AI technologies in various

sectors, including remote work, customer service, and contactless automation, further

impacting job markets.

8
 X. Present: Ongoing advancements in AI, including natural language processing, computer

vision, and automation, continue to pose risks to jobs across a wide range of industries.

It's important to note that while AI has the potential to automate certain job functions, it can also

create new job opportunities and transform industries in positive ways. The overall impact on the

job market depends on various factors, including the rate of AI adoption, workforce reskilling, and

the development of new roles that complement AI technologies.

The Process of Making an AI Model

The process of creating an AI involves several stages and techniques. Here's a high-level overview

of the typical steps involved in developing an AI system:

1. Define the Objective: Clearly define the purpose and objective of the AI system. Determine

the problem it aims to solve, the tasks it should perform, or the goals it should achieve.

2. Data Collection: Gather a comprehensive and relevant dataset that will be used to train the

AI system. The dataset should be diverse, representative, and labeled or annotated if

necessary.

3. Data Preprocessing: Clean the collected data by removing noise, handling missing values,

standardizing formats, and performing other necessary preprocessing steps. This ensures

that the data is in a suitable format for training the AI model.

4. Model Selection: Choose an appropriate AI model or algorithm that aligns with the

objective of the system. This can include machine learning algorithms such as decision

trees, neural networks, support vector machines, or deep learning architectures like

convolutional neural networks (CNNs) or recurrent neural networks (RNNs).

9
 5. Model Training: Train the selected AI model using the preprocessed dataset. This involves

feeding the model with input data and adjusting its internal parameters iteratively to

minimize errors or optimize performance. The training process aims to enable the model

to learn patterns, relationships, or representations from the data.

6. Evaluation and Validation: Assess the performance of the trained AI model using

evaluation metrics and validation techniques. This helps determine how well the model

generalizes to new, unseen data and whether it meets the desired performance criteria.

7. Iterative Improvement: Refine the AI model based on the evaluation results. This may

involve adjusting hyper parameters, exploring different architectures, or employing

regularization techniques to enhance performance and address any limitations or

shortcomings.

8. Deployment: Integrate the trained AI model into a functional system or application where

it can be utilized to perform the intended tasks or provide intelligent capabilities. This may

involve developing an interface, integrating with other software components, or deploying

the AI model on cloud infrastructure.

9. Monitoring and Maintenance: Continuously monitor the AI system's performance, evaluate

its outputs, and make necessary updates or improvements as new data becomes available

or requirements change. Maintenance may also involve addressing biases, ensuring ethical

considerations, and keeping the AI system up to date with advancements in the field.

It's important to note that AI development can vary depending on the specific approach,

techniques, and technologies used. Additionally, the process may require expertise in areas such

as data science, machine learning, programming, and domain knowledge relevant to the problem

being addressed.

10
Indian Job Market

The Indian job market refers to the employment landscape and conditions specific to India. It

encompasses the supply and demand of jobs, workforce demographics, industry sectors, and

government policies that influence employment opportunities and the labor force in the country.

The job market is the market in which employers search for employees and employees search for

jobs. The job market is not a physical place as much as a concept demonstrating the competition

and interplay between different labor forces. It is also known as the labor market.

The job market can grow or shrink depending on the demand for labor and the available supply of

workers within the overall economy. Other factors which impact the market are the needs of a

specific industry, the need for a particular education level or skill set, and required job functions.

The job market is a significant component of any economy and is directly tied in with the demand

for goods and services.

Table 1: Unemployment Data in India

Year Unemployment Rate

2010 8.32%

2011 8.17%

11
2012 8.1%

2013 8.04%

2014 7.98%

2015 7.92%

2016 7.84%

2017 7.73%

2018 7.65%

2019 6.51%

2020 10.2%

2021 7.71%

2022 7.33%

Source: statista.com

12
Key Aspects of the Indian Job Market:

i. Population and Workforce: India is the second-most populous country in the world, with a

vast and diverse population. The size and composition of the population have a direct

impact on the labor force. India's workforce comprises individuals from different age

groups, educational backgrounds, and skill levels. This demographic diversity influences

the job market by creating a varied pool of talent and labor supply. India has a population

of over 1.3 billion people. The working-age population (15-64 years) is estimated to be

around 65% of the total population, amounting to more than 800 million individuals.

ii. Industry Sectors: The Indian job market encompasses a range of industry sectors. The

information technology (IT) sector has experienced significant growth and has been a

major driver of employment in recent years. Other important sectors include

manufacturing, healthcare, finance, agriculture, education, and services. The contribution

of each sector to employment varies, with some sectors offering more job opportunities

and higher growth potential than others. The Indian job market is diversified across various

sectors. As of 2021, the information technology (IT) and business process management

(BPM) sector employed around 4.5 million professionals. The manufacturing sector

accounted for approximately 22% of the total employment, with industries such as

automobiles, textiles, and pharmaceuticals being major contributors. Agriculture remains

a significant employer, engaging around 43% of the workforce, although its contribution

to GDP has decreased over time.

iii. Skill Requirements and Education: The Indian job market places a strong emphasis on

educational qualifications and skill sets. Employers often seek candidates with specific

educational degrees, certifications, or technical skills. The demand for skilled professionals

13
 has been rising, particularly in areas such as software development, data analytics, digital

marketing, artificial intelligence, and cybersecurity. While a college degree is highly

valued, vocational and skill-based training programs are also gaining importance. The

demand for skilled professionals in India is increasing. By 2022, it is estimated that the

country will require around 700-800 million skilled workers across various sectors. The

number of engineering graduates in India has been growing steadily, with over 1.5 million

students graduating each year. However, there is a growing need to bridge the skill gap and

align education with industry requirements to enhance employability.

iv. Unemployment and Underemployment: The Indian job market faces challenges related to

unemployment and underemployment. Despite the growing economy, a significant portion

of the workforce remains unemployed or underemployed. Many job seekers struggle to

find suitable employment matching their qualifications and expectations.

Underemployment is also prevalent, with individuals working in jobs that do not fully

utilize their skills and qualifications. Unemployment remains a significant challenge in the

Indian job market. As of 2021, the unemployment rate in India stood at around 6-7%.

Additionally, underemployment is prevalent, with a considerable portion of the workforce

engaged in jobs that do not fully utilize their skills or provide adequate income. The youth

unemployment rate is particularly concerning, with many educated young individuals

struggling to find suitable employment.

v. Government Initiatives and Policies: The Indian government has implemented various

initiatives and policies to address employment challenges and shape the job market. Skill

development programs, such as the Skill India initiative, aim to enhance the employability

of the workforce by providing training and certification in different sectors. The

14
 government also promotes entrepreneurship through schemes like Startup India, which

encourages the creation of new businesses and job opportunities. The Indian government

has launched several initiatives to address employment challenges. The Pradhan Mantri

Kaushal Vikas Yojana (PMKVY) aims to provide skill training to millions of individuals

across sectors. The Make in India campaign promotes manufacturing and job creation,

while the Startup India initiative supports entrepreneurship and innovation.

vi. Gig Economy and Informal Sector: The gig economy and informal sector have a notable

presence in the Indian job market. The gig economy refers to temporary, contract, and

freelance work arrangements facilitated by technology platforms. It provides flexibility for

both employers and workers but comes with challenges such as job insecurity and limited

social security benefits. Additionally, a significant portion of the Indian workforce is

engaged in the informal sector, which often lacks formal employment contracts and social

protections. The gig economy is growing in India, with a significant number of individuals

participating in freelance or contract work facilitated by digital platforms. It is estimated

that by 2022, the gig economy will employ around 90 million people in India. The informal

sector also plays a crucial role in the job market, with a large portion of the workforce

engaged in activities such as street vending, construction, and small-scale businesses.

vii. Emerging Trends: The Indian job market is witnessing several emerging trends.

Technological advancements, such as artificial intelligence and automation, are reshaping

job roles and requiring new skill sets. Digital transformation is driving demand for

professionals with expertise in areas like cloud computing, big data analytics, and e-

commerce. The COVID-19 pandemic has also accelerated trends such as remote work and

virtual collaboration. Furthermore, there is a growing interest in entrepreneurship, with an

15
 increasing number of individuals starting their own businesses or joining startups.

Emerging technologies are reshaping the Indian job market. The artificial intelligence (AI)

sector in India is projected to create over 2.5 million jobs by 2025. E-commerce, digital

marketing, data analytics, and cybersecurity are among the sectors experiencing increased

demand for skilled professionals. Remote work arrangements have gained traction due to

the COVID-19 pandemic, with estimates suggesting that by 2025, nearly 50% of the Indian

workforce could be working remotely for a significant portion of their time.

Understanding the dynamics of the Indian job market is crucial for job seekers, employers,

policymakers, and researchers. It helps individuals make informed career choices,

organizations align their workforce strategies, and policymakers design initiatives to promote

employment growth, skill development, and inclusive economic growth in the country.

Figure 3: Unemployment Rate in India

16
OBJECTIVE OF STUDY

 To study the impact of artificial intelligence and automation on the Indian job

market.

 The project report aims to assess the preparedness of the Indian system,

including government policies and educational institutions to adapt to the

changing job market influenced by AI and automation.

 The report aims to show challenges presented by AI integration in the Indian

job market.

 Based on the findings of the study, the project report will provide actionable

recommendations for policymakers, businesses, and individuals.

17
IMPORTANCE OF THE STUDY

The study on the impact of artificial intelligence (AI) on the Indian job market and the readiness

of the system holds immense importance for various stakeholders in India. As AI continues to

advance rapidly, understanding its implications for the job market is crucial for individuals,

businesses, and policymakers. By conducting this study, we aim to provide valuable insights into

the potential changes and disruptions that AI might bring, allowing stakeholders to anticipate and

prepare for the transformation.

One of the primary objectives of the project report is to assess the readiness of the Indian system

to adapt to the evolving job market influenced by AI. This assessment involves evaluating

government policies, educational institutions, and training programs to determine their

effectiveness in equipping individuals with the necessary skills and competencies for AI-driven

jobs. By identifying the gaps and areas that require improvement, the study will contribute to

strategic decision-making and the development of targeted measures to enhance the system's

readiness.

In addition to assessing readiness, the project report aims to identify both the opportunities and

challenges presented by the integration of AI in the Indian job market. Through thorough analysis,

we will examine sectors with potential for growth and expansion in the AI era. This analysis will

help individuals and businesses align their career paths and business strategies accordingly,

ensuring they are well-positioned to leverage the opportunities presented by AI. Furthermore, the

study will shed light on the challenges, such as potential job displacement and skill gaps that may

arise with AI adoption. By understanding these challenges, stakeholders can proactively address

them and implement strategies to mitigate their impact.

18
Based on the findings of the study, the project report will provide actionable recommendations for

policymakers, businesses, and individuals. These recommendations will be instrumental in guiding

policymakers as they design and implement policies that facilitate a smooth transition to an AI-

driven job market. Policy suggestions may include creating an enabling environment for AI

adoption, establishing mechanisms to address potential job displacement, and fostering

collaboration between academia and industry. For businesses, the report will offer insights into

workforce strategies, emphasizing the importance of upskilling employees and adapting to the

changing demands of the job market. Individual readers will benefit from recommendations related

to career choices, skill development, and lifelong learning, enabling them to make informed

decisions and navigate the AI-driven job market successfully.

Furthermore, the study aims to raise awareness and promote a better understanding of the impact

of AI on the Indian job market. By disseminating knowledge and insights, the project report

contributes to informed discussions and decision-making at individual, organizational, and societal

levels. It helps dispel misconceptions and fears associated with AI, fostering dialogue and

collaboration among stakeholders. Through this awareness-raising effort, individuals, businesses,

and policymakers can actively engage with the opportunities and challenges presented by AI,

leading to a more inclusive and equitable future job market.

The study titled "The Impact of Artificial Intelligence on the Indian Job Market and the Readiness

of the System" holds significant importance for various stakeholders in India. The following points

highlight the importance of this study:

i. Anticipating and Understanding Change: With the rapid advancement of artificial

intelligence, studying its impact on the Indian job market is crucial for individuals,

19
 businesses, and policymakers. The study provides insights into the potential changes and

disruptions that AI might bring, allowing stakeholders to anticipate and prepare for the

transformation.

ii. Assessing Readiness: The project report aims to assess the readiness of the Indian system

to adapt to the evolving job market influenced by AI. By evaluating government policies,

educational institutions, and training programs, the study examines the current

preparedness and identifies areas that require improvement. This assessment facilitates

strategic decision-making and the development of effective measures to enhance the

system's readiness.

iii. Identifying Opportunities and Challenges: The report aims to identify both the

opportunities and challenges presented by the integration of AI in the Indian job market.

By analyzing sectors with potential growth and identifying the skills likely to be in demand,

the study helps individuals and businesses align their career paths and business strategies

accordingly. It also sheds light on the challenges, such as potential job displacement and

skill gaps, enabling stakeholders to proactively address these issues.

iv. Providing Actionable Recommendations: Based on the study's findings, the project report

will provide actionable recommendations for policymakers, businesses, and individuals.

These recommendations can guide policymakers in designing effective policies that

support a smooth transition, promote skill development programs, and ensure inclusivity

in the AI-driven job market. Businesses can utilize these recommendations to adapt their

workforce strategies and up-skill employees, while individuals can make informed

decisions regarding their career choices and skill development.

20
 v. Raising Awareness and Understanding: One of the essential objectives of the project report

is to raise awareness and promote a better understanding of the impact of AI on the Indian

job market. By disseminating knowledge and insights, the study contributes to informed

discussions and decision-making at individual, organizational, and societal levels. It helps

dispel misconceptions, fosters dialogue, and empowers stakeholders to actively engage

with the opportunities and challenges presented by AI.

The study on the impact of artificial intelligence on the Indian job market and the readiness of the

system is of utmost importance. It provides valuable insights into the potential changes and

disruptions brought about by AI, allowing stakeholders to anticipate and prepare for the

transformation. The assessment of readiness helps identify areas for improvement and strategic

measures to enhance the system's preparedness. The identification of opportunities and challenges

empowers stakeholders to align their strategies and actions accordingly. The actionable

recommendations enable policymakers, businesses, and individuals to navigate the evolving job

market effectively. Finally, the study raises awareness, fosters understanding, and promotes

dialogue, contributing to a more inclusive and future-ready Indian job market.

21
LITERATURE REVIEW

I. "ARTIFICIAL INTELLIGENCE AND THE FUTURE OF WORK IN INDIA" BY

NASSCOM:-

This report explores the potential impact of AI on the Indian workforce, providing insights into
the challenges and opportunities faced by different industries. It also discusses the need for up-
skilling and policy interventions. (Available at:
https://community.nasscom.in/download/artificial-intelligence-future-work-india.html)

II. "AI IN INDIA: A LABOR MARKET PERSPECTIVE" BY WORLD BANK:-

This report examines the impact of AI on the Indian labor market, including job displacement
and creation. It analyzes the readiness of the labor force and provides policy recommendations
for a smooth transition. (Available at:
https://openknowledge.worldbank.org/bitstream/handle/10986/31485/132507.pdf)

III. "ARTIFICIAL INTELLIGENCE AND EMPLOYMENT IN INDIA" BY

INTERNATIONAL LABOUR ORGANIZATION (ILO):

This working paper discusses the impact of AI on employment in India, focusing on sectors such
as manufacturing, services, and agriculture. It highlights the need for skill development and
policy frameworks to address the challenges. (Available at:
https://www.ilo.org/wcmsp5/groups/public/---asia/---ro-
bangkok/documents/publication/wcms_674497.pdf)

IV. "THE IMPACT OF ARTIFICIAL INTELLIGENCE ON EMPLOYMENT IN INDIA"

BY CENTRE FOR THE STUDY OF DEVELOPING SOCIETIES (CSDS):

This research paper analyzes the potential consequences of AI adoption on employment in India.
It examines the implications for different sectors and discusses policy interventions for a just and

22
inclusive transition. (Available at:
http://www.csds.in/images/publication_files/WorkingPapers/WP160AI.pdf)

V. "ARTIFICIAL INTELLIGENCE AND FUTURE JOBS IN INDIA: AN ANALYSIS OF

THE POLICY LANDSCAPE" BY OBSERVER RESEARCH FOUNDATION (ORF):

This report provides an overview of the policy landscape related to AI and jobs in India. It
evaluates government initiatives, industry collaborations, and skill development programs to
assess the readiness of the ecosystem. (Available at: https://www.orfonline.org/wp-
content/uploads/2019/03/ORF_IssueBrief_267_AIandFutureJobs.pdf)

23
RESEARCH METHODOLOGY

A research methodology is a means to describe how a researcher plans to conduct their

investigation. It is a rational, methodical approach to a study issue. A methodology explains how

a researcher will conduct the study in order to produce accurate, legitimate data that meet their

goals and objectives. It includes the data they will gather, where they will get it, how they will

gather it, and how they will analyze it.

A research approach offers the study credibility and yields reliable scientific results. Additionally,

it offers a thorough plan that aids in keeping researchers on course, facilitating a simple, efficient,

and manageable approach. The reader can comprehend the strategy and procedures utilized to

arrive at results by understanding the researcher's methodology.

Primary Data

Primary data is information that is gained directly from first-hand sources through surveys,

observation, or experimentation. It is information that has not yet been published and is derived

from a new or original research project. For example, in marketing.

Utilizing primary data has the benefit of allowing researchers to gather data specifically for their

study's objectives. Fundamentally, the questions the researchers pose are designed to elicit the

information they need for their investigation. By conducting their own surveys, interviews, and

direct observations, researchers gather the data.

For instance, a researcher may conduct direct observations by seeing people at work in the field of

workplace health research. The researcher could keep track of and code instances of practices or

24
behaviours that are of interest to her, such as instances of incorrect lifting posture or the frequency

of unpleasant or disrespectful interactions staff members have with clients and consumers over

time.

For another illustration, suppose a study team is interested in learning about how employees adjust

to returning to work following an injury sustained at work. Telephone interviews with employees

on their length of absence from work and their experiences with the return-to-work process may

be a part of the research. The responses of the workers, which are regarded as primary data, will

give the researchers detailed information about the return-to-work process. For example, they may

discover the frequency of offers of work accommodations and the reasons some workers declined

such offers.

Secondary Data

Secondary data is information gathered from a source other than the user. Censuses, organizational

records, and data gathered through qualitative techniques or qualitative research are typical sources

of secondary data for social science.

Secondary data might be of various forms. They may contain data from other government

databases, such as the national population census and other data gathered by Statistics Canada.

Administrative data is one category of secondary data that is being used more and more. Data that

is routinely gathered as part of a company, institution, or agency's daily activities is referred to by

this phrase. There are numerous instances, including documents from workers' compensation

claims, hospital admission and discharge records, and automobile registrations.

25
Secondary data is typically easier to find and less expensive to acquire than main data.

Additionally, because administrative data are routinely and thoroughly collected, they frequently

have large samples. Additionally, administrative data—along with many other kinds of secondary

data—are gathered over an extended period of time. This enables scientists to spot changes over

time.

In the case of the aforementioned return to work study, the researchers had the option of looking

at secondary data in addition to the information provided by their primary data (i.e. survey results).

To find out how long workers were getting wage replacement benefits, they might examine

losttime claims data from workers' compensation. The researchers may be able to identify the

variables that indicate a shorter work absence among wounded workers using a combination of

these two data sources. The return to work for other injured workers could then be enhanced with

the aid of this information.

The study question, the researcher's budget, their expertise, and the resources at their disposal can

all influence the type of data they chose. They may opt to employ primary data, secondary data, or

both depending on these and other considerations.

The project's nature prevented any primary data from being gathered. However, secondary data

has been gathered from a number of websites, as well as from national and international

organizations including the NITI Aayog, ILO, World Bank, World Economic Forum, UNDP, Press

Information Bureau, Minister of State for Electronics and Information Technology, PwC, and

Observers Research Foundation etc.

The data is then studied extensively and a conclusion was derived.

26
SCOPE OF STUDY

The scope of the study for the project report titled "The Impact of Artificial Intelligence on the

Indian Job Market and the Readiness of the System" encompasses a comprehensive examination

of various aspects related to AI's impact on the Indian job market and the readiness of the system

to adapt to these changes. This study aims to provide a holistic understanding of the implications

of AI adoption and its effects on the workforce, economy, and society at large. By delving into the

following key areas, the research will contribute to valuable insights and recommendations for

stakeholders:

Firstly, the study will analyze the impact of AI on the Indian job market. It will explore how AI

technologies, such as automation, machine learning, and robotics, are transforming job roles,

creating new employment opportunities, and potentially leading to job displacement. The scope

includes assessing the magnitude of AI's impact across different industry sectors and occupational

categories. By examining specific examples and case studies, the study aims to identify the key

areas where AI is likely to have the most significant impact and provide an overview of the

changing dynamics within the job market.

Secondly, the project report will evaluate the preparedness of the Indian system to adapt to the

changing job market influenced by AI. This encompasses a comprehensive assessment of

government policies, regulations, and initiatives aimed at facilitating a smooth transition to an AI-

driven economy. The study will analyze the effectiveness of existing policies in supporting AI

research and development, fostering innovation, and creating an enabling environment for

businesses to adopt AI technologies. Additionally, it will assess the preparedness of educational

27
institutions, training programs, and vocational courses in equipping individuals with the necessary

skills and competencies for AI-related jobs.

Within the scope of the study, an examination of skill development programs and initiatives will

be conducted. This includes assessing the effectiveness of existing programs in addressing skill

gaps and fostering the acquisition of AI-relevant skills. The study will explore the availability and

accessibility of training programs and certifications that enable individuals to upskill or reskill for

AI-related roles. By analyzing the alignment between industry demands and the skill sets provided

by educational institutions and training programs, the study aims to identify potential areas for

improvement and make recommendations to bridge the skill gap effectively.

The project report will also analyze the policies and initiatives undertaken by the Indian

government to support the integration of AI in the job market. This involves examining policies

related to AI research and development, data privacy and security, intellectual property rights, and

ethical considerations. The scope includes assessing the effectiveness of these policies in fostering

innovation, creating a supportive ecosystem, and addressing societal challenges associated with

AI adoption. By evaluating the current policy landscape, the study aims to provide

recommendations for policy reforms and initiatives that can further enhance the AI ecosystem in

India.

In addition, the study will identify and analyze the opportunities and challenges presented by AI

integration in the Indian job market. It will explore sectors and occupations that are likely to

experience growth and demand for AI-related skills. By examining emerging trends and industry

forecasts, the study aims to provide insights into the potential job opportunities and career paths

in the AI era. Furthermore, the study will address the challenges associated with AI adoption, such

28
as potential job displacement, skill gaps, and ethical implications. By understanding these

challenges, the study will identify strategies and approaches to address them effectively and ensure

a smooth transition to an AI-driven job market.

Based on the findings of the study, the project report will provide actionable recommendations for

policymakers, businesses, educational institutions, and individuals. The scope encompasses

providing guidance on policy reforms, promoting collaboration between academia and industry,

designing effective training programs, and fostering a future-ready workforce.

Table 2: Job Loss to Automation by 2030 in Major Economies

Country Job Loss to Automation by 2030

USA 236 million

China 120 million

India 73 million

Japan 30 million

Germany 17 million

Source: McKinsey

29
LIMITATIONS OF THE STUDY

The study on the impact of artificial intelligence (AI) on the Indian job market and the readiness

of the system has certain limitations that need to be acknowledged. While the research aims to

provide valuable insights and recommendations, it is essential to understand the boundaries within

which the study operates. The following limitations should be considered:

 Time Constraints: Conducting a comprehensive study on such a complex and evolving

topic within a limited timeframe may restrict the depth of analysis. The rapidly changing

nature of AI and its impact on the job market necessitates continuous monitoring and

analysis, which may not be fully captured within the scope of a single project report.

 Availability and Reliability of Data: The accuracy and availability of relevant data play a

critical role in conducting a robust study. However, data pertaining to the Indian job market

and AI adoption may be limited, fragmented, or subject to data privacy constraints. The

study's conclusions and recommendations may be influenced by the quality and availability

of data sources.

 Generalizability: The findings of the study may be specific to the Indian context and may

not be directly applicable to other countries or regions. Factors such as cultural, economic,

and regulatory differences can influence the impact of AI on job markets in different

contexts. Therefore, caution should be exercised when extrapolating the study's results

beyond the Indian job market.

 Complex Dynamics: The impact of AI on the job market involves intricate interactions

between various stakeholders, including individuals, businesses, educational institutions,

and policymakers. Understanding the multifaceted dynamics and capturing the

30
 perspectives of all stakeholders comprehensively can be challenging. The study may not

capture the full range of perspectives and nuances associated with AI's impact on the job

market.

 Unforeseen Developments: Given the rapid pace of technological advancements, there is a

possibility of unforeseen developments or breakthroughs in AI that may significantly

influence the job market. The study's findings and recommendations may not fully account

for these unforeseen developments, which could impact the accuracy and relevance of the

conclusions.

 Future Uncertainty: The nature of AI and its impact on the job market is characterized by

uncertainties and evolving trends. Predicting the long-term implications with absolute

certainty is challenging. The study can provide insights based on the available information

and trends, but it cannot predict future scenarios with complete accuracy.

31
CHAPTER-2

32
CONCEPTUAL FRAMEWORK

Since a few years ago, advances in predictive analytics and generative AI, as well as AI voice

assistants like Siri and Alexa, have revolutionized the world. Artificial intelligence is altering the

way we work, play, and live. We'll look at how developments in AI technology affect the labour

market and the nature of the future of employment in this piece.

The work market is being significantly impacted by AI. According to "The Future of Jobs Report

2020" from the World Economic Forum, AI will eliminate 85 million jobs globally by 2025. The

same estimate also suggests that 97 million new roles might be created by AI. However, the jobs

that AI will create will not be the same as the ones that are being lost. AI is already being utilised,

for instance, to automate tedious and repetitive operations like data entry and processing.

Therefore, it is likely that in the future, professions needing these talents will be automated.

However, it is less likely that in the near future, vocations requiring human abilities like creativity,

empathy, and problem-solving would be replaced by robots. But these vocations will also be

affected as AI develops.

Artificial intelligence (AI) and cognitive science are two distinct disciplines, with overlapping

methodologies but with rather different goals. AI is a branch of computer science and is concerned

with construction and deployment of intelligent agents as computer programs, and also with

understanding the behavior of these artifacts. The core scientific goal of AI is to understand the

basic principles of intelligent behavior that apply equally to animal and artificial systems. Almost

all of the work is mathematical or computational in character and much of the literature is

technique oriented.

33
Cognitive science is an explicitly interdisciplinary field that has participation not only from AI,

but also from linguistics, philosophy, psychology, and subfields of other social and biological

sciences. The unifying goal of cognitive science is to understand and model human intelligence,

using the full range of findings and methodologies of the complementary disciplines. As one would

expect, a wide range of techniques from the mathematical, behavioral, social, and biological

sciences are employed. Cognitive science, in contrast with AI, is defined more by phenomena than

by methodology. There are research groups that are active in both AI and cognitive science, but

they tend to produce different types of reports for journals and conferences in the two areas.

Machine Learning

Intelligent systems have the fundamental ability to learn. It is at the core of the majority of the

recent remarkable successes of artificial intelligence, including driving automobiles, playing chess,

identifying people and objects, and assisting humans in a variety of jobs. It is becoming

omnipresent in AI applications.

As we saw in the earlier section, machine learning began with a similar flavour. In other words,

the first objective was learning knowledge that was strongly connected to cognitive science and

represented in some rule-based representation or in terms of decision trees. Another area of

research relies on techniques from pattern recognition and statistics, whose results use

representations that are more straightforward and are based on attribute-value pairs or

propositional representations. Inductive Logic Programming, another method of using logic to

learn, is based on the inference of logic programmes from a given set of favourable and

unfavourable facts regarding the subject to be studied. Neural networks, which are networks of

basic computational elements inspired by the behaviour of the neurons in the brain, are the
34
foundation of many recent successful applications. Essentially, the synthetic neurons are layered

and connected via digital synapses. The bottom layer is responsible for processing the incoming

signals; after that, each neuron in a layer combines the values acquired through its synapses into a

new value and propagates it to the next layer in accordance with some (basic) function. During the

training process, the parameters of the functions acting at each neuron are repeatedly adjusted

based on the network's reaction to both positive and negative instances of the subject to be taught.

Powerful tools are now available that make it simple for researchers and professionals to create

effective learning systems. Some of these tools are even open source (like TensorFlow, which was

created by the Google Brain Team originally). Consider just one of the innumerable achievements

of such technology, like DeepMind's AlphaGo go-playing programme. Because it mixes machine

learning with randomised tree searches, this is a good illustration of AI software. The value

network and the policy network are the two neural networks used in the deep learning component.

Using a database of 30 million movements from classic matches, the first training was conducted.

The algorithm then carried on learning by competing with other AlphaGo robots.

The so-called "black box problem" is a disadvantage of deep learning approaches because, unlike

the alternative symbolic approach to learning, knowledge is buried in the network parameters and

we are unable to fully grasp what occurs there and why. As a result, when something goes wrong,

it is unclear how to resolve the issue. There are experiments that demonstrate fairly simple

situations when the network is confused and there is no simple solution.

35
A Brief History of AI

The academic topic of artificial intelligence (AI) was first established in the 1950s, and until the

2000s, it remained a relatively unimportant area of study. Depending on the type of intelligence

(cognitive, emotional, and social intelligence) involved, AI can be divided into three main

categories: analytical, human-inspired, and humanised. Three main classes—artificial limited,

general, and super intelligence—have been introduced in another classification that is based on its

evolutionary stage.

Regardless of the classification, there is a significant question that applies to all of these methods

and touches on both philosophical and ethical issues. The issue is whether artificially intelligent

machines' behaviour should be identical to human behaviour.

It is founded on the distinction between dualistic and materialism conceptions of the mind from a

historical perspective. In his Discourse on the Method from 1637, René Descartes wrote:

“How many different automata or moving machines can be made by the industry of man ... For

we can easily understand a machine's being constituted so that it can utter words, and even emit

some responses to action on it of a corporeal kind, which brings about a change in its organs; for

instance, if touched in a particular part it may ask what we wish to say to it; if in another part it

may exclaim that it is being hurt, and so on. But it never happens that it arranges its speech in

various ways, in order to reply appropriately to everything that may be said in its presence, as

even the lowest type of man can do.”

36
Descartes noted that automata are capable of responding to external stimuli but they cannot

respond the way that any human can.

According to dualism, the mind is nonphysical, i.e., it has nonphysical properties and therefore a

pure physical approach cannot explain the mind at all. In this scenario it is impossible to reproduce

the behavior of the mind. Conversely, materialism argues that the mind can be explained

physically, and therefore it is theoretically possible to reproduce the mind.

Starting from these considerations, in the middle of the 20th century researchers in the United

Kingdom explored for many years the possibility to build machine intelligence and then founded

the artificial intelligence field in 1956. This field was started by the members of the Ratio Club, a

group of researchers including Alan Turing. In particular, the pioneering work of Alan Turing

during WWII constituted the foundation stone of the concept of computer intelligence. In

particular, Alan Turing investigated the question of whether or not it is possible for machinery to

show intelligent behavior. To resolve the problem, Turing proposed a first experiment involving

three subjects: A, B, and C. Then, in his paper Computing Machinery and Intelligence, Alan Turing

in reasoning about the question ‘Can machines think?’ proposed to reformulate the proposition as:

Can machines do what we (as thinking entities) can do?. Then, he proposed a test known as the

“imitation game”. In this test a man and a woman go into separate rooms, and guests try to tell

them apart by writing a series of questions and reading the typewritten answers sent back. Both

the man and the woman have the goal to convince the players that they are the other. Turing

modified the game by exchanging one of the two players (man or woman) with a machine. This

enabled Turing to formulate the following question: “Will the interrogator decide wrongly as often

37
when the game is played like this as he does when the game is played between a man and a

woman?”

Figure 4: The Imitation Game Diagram

Following the publication of this influential study, the term "artificial intelligence" was first used

in a formal sense in 1956 during a conference at Dartmouth College that featured a session on the

topic. A functional programming language called LISP (List Processing Language) was created to

create programs for artificial intelligence.

After this initial phase, AI went through a difficult time until 1970. Researchers began to pay more

attention to AI between 1970 and 1975, and it had some success with a few applications (see the

following section). This supported the notion that AI might penetrate fields of research like

psychology, biology, and medicine.

38
What is Job Market?

The place where both employers and job seekers conduct their searches is known as the job market.

The concept of the job market, which illustrates the competitiveness and interaction between

various labour forces, is more important than any actual location. The labour market is another

name for it.

Depending on the demand for labour and the availability of workers in the larger economy, the job

market may expand or contract. The demands of a particular industry, the requirement for a given

degree of education or skill set, and necessary job tasks are other market-influencing elements.

Any economy's job market is an important part, and it is closely related to consumer demand for

goods and services.

Figure 5: Percentage of Jobs Divided by Category in India

39
The Job Market and the Unemployment Rate

The job market and the unemployment rate are also closely associated. The percentage of people

in the labour force who are not currently working but are actively looking for work is known as

the unemployment rate. The labour supply in the total job market increases as the unemployment

rate rises.

Employers might be more selective or drive down salaries when they have a broader pool of

candidates to choose from. On the other hand, when the unemployment rate declines, companies

are compelled to wage a more intense labour market battle. The rivalry for workers results in higher

wages. For economists and those responsible for formulating public policy based on the status of

the general economy, wages established by the job market offer useful information.

When the economy is struggling, firms may cut down on hiring and create fewer new positions,

which makes it harder for job seekers to find employment and causes unemployment to grow. High

unemployment rates can cause social unrest and extend economic stagnation, which is a prolonged

period of little or no development in an economy. This results in the loss of possibilities for many

people to live comfortably.

The Current Population Survey is a study that measures the state of the labour market. It is a

statistical survey that the U.S. Bureau of Labour Statistics conducts once a month. An approximate

60,000-home representative sample is used in the study to try and ascertain the unemployment rate

in particular areas, the respondents' earnings, the number of hours they worked, and many other

demographic data.

40
What are the main types of unemployment?

There are three main types of unemployment – cyclical, structural and frictional unemployment.

In practice, these cannot be measured directly, and they can often overlap, but they provide a useful

way of thinking about unemployment.

Figure 6: Organization of Labour Market

Source: Reserve Bank of Australia

Cyclical Unemployment

Cyclical unemployment occurs with changes in economic activity over the business cycle.

41
When there is a decline in demand for goods and services, there are fewer jobs available for

individuals who wish to work. Businesses that are facing reduced demand may downsize their

workforce by terminating existing employees or employing fewer new employees. As a result, it

will be more difficult for those looking for job to get employment. When demand increases, the

situation is the exact opposite.

Cyclical unemployment is frequently referred to as being of a medium-term (one to 12 months)

character. Examples include how the unemployment rate increased significantly in the early 1990s

recession, dropped to a low point in the middle of the 2000s, and then increased once more around

the time of the global financial crisis.

A rise in cyclical unemployment may indicate that the economy is not performing to its full

potential. Businesses may give less wage increases as a result of the increased competition for

jobs, which would help to contain inflation. This sort of unemployment can be decreased with the

aid of policies that increase aggregate demand, such as expansionary monetary policy (since

companies that experience higher demand are more likely to employ more workers).

Structured Unemployment

When there is a discrepancy between the jobs that are available and the persons looking for work,

structural unemployment results. This mismatch may exist because the accessible jobs are far away

from the job seekers or because the available jobs require different talents than the ones the job

seekers possess.

Workers who work in industries that are shrinking or who possess abilities that could be automated

as a result of significant technological advancements risk losing their jobs. They can struggle to

42
obtain employment in a different sector, so they might need to acquire new skills or relocate to an

area with more prospects.

For instance, the percentage of individuals employed in typical manual labour has significantly

decreased over the past few decades, with some of these activities being mechanised as a result of

technological advancements. The manufacturing sector is one example of a sector with a

significant proportion of routine manual jobs that has seen a fall in both production and

employment.

When compared to other types of unemployment, structural unemployment typically lasts longer.

This is due to the fact that it may take workers a number of years to gain new skills or move to a

different area in order to find a job that fits their qualifications. Therefore, those who are

unemployed due to structural issues are more likely to experience long-term unemployment (for

more than 12 months).

Contrary to cyclical unemployment, structural unemployment persists even in prosperous

economic times. The best way to deal with this form of unemployment is to implement policies

that place an emphasis on skills and the labour supply. In principle, it shouldn't have any direct

impact on wages or inflation.

Frictional Unemployment

Frictional unemployment happens when people enter and exit the labour force, change

occupations, or transition between jobs in the labour market.

43
Workers moving around is essential for a flexible labour market and aids in achieving an effective

distribution of labour throughout the economy. However, finding a job may take some time and

effort, and people may not find one right away. Businesses also invest effort in looking for

qualified applicants to fill open positions. People looking for work may endure a brief period of

unemployment as a result of the fact that openings are not instantly matched with applicants.

Less than a month is the typical length of this form of unemployment. Like structural

unemployment, frictional unemployment is expected to exist over the whole business cycle and is

unlikely to have an impact on wages or inflation.

These three distinct forms of unemployment are interdependent. For instance, structural

unemployment may increase during a time of high cyclical unemployment. This could happen

when someone stay unemployed for so long that their productivity and abilities decline, and they

are viewed as less employable, which lowers the likelihood that they will be hired in the future.

Other Types of Unemployment

There are some other types of unemployment that are also important to consider. In particular, the

underemployment rate can be thought of as a complementary indicator to the unemployment rate

when thinking about conditions in the labour market.

 Underemployment: Underemployment occurs when people are employed, but would like

and are available to work more hours. There are two categories of underemployed people

defined by the ABS. First, part-time workers who would prefer to work additional hours.

Second, people who usually work full time, but are currently working part-time hours.

44
 Underemployment rates are generally higher among groups that have a larger proportion

of people working part time, such as females, younger workers and older workers.

 Hidden Unemployment: Hidden unemployment occurs when people are not counted as

unemployed in the formal ABS labour market statistics, but would probably work if they

had the chance. For example, someone might have looked for work for a long time, given

up hope and stopped looking, but still wish to work. (These people are sometimes referred

to as ‘discouraged workers’.)

 Seasonal Unemployment: Seasonal unemployment occurs at different points over the year

because of seasonal patterns that affect jobs. Some examples include ski instructors, fruit

pickers and holiday-related jobs. The ABS publishes seasonally adjusted labour market

statistics, which remove seasonal patterns in the data.

Figure 7: Unemployment Rate in India

45
CHAPTER-3

46
FINDINGS, ANALYSIS AND INTERPRETATION

Findings

OBJECTIVE A: - To study the impact of artificial intelligence and automation

on the Indian job market.

The rapid evolution of AI and robots could eliminate 73 million American jobs by 2030, according

to a new report from the McKinsey Global Institute. The research notes that those losses could be

offset by an increase in productivity, economic growth and other factors. However, maintaining

full employment is likely to be highly challenging as the economy and labor market would require

massive overhauls.

Midpoint automation could lead to 39 million U.S. job losses by 2030 while rapid automation

could cost 73 million. Despite the potential losses, however, about 20 million displaced people

could be shifted into similar jobs where they could tackle slightly different tasks. Still, a significant

share would have to be retrained completely in the U.S. and many other developed countries.

McKinsey reported that a third of the 2030 workforce in the U.S. might need to be retrained, as

well as nearly half of Japan's.

Rapid automation could also cost China and India 236 and 120 million jobs respectively by 2030.

In Japan, the worst case scenario would see 30 million losses. Mexico could have 18 million

displaced workers by then while Germany could have 17 million. The jobs most threatened by

automation tend to be physical and predictable with examples including workers in the fast food

47
sector or machinery operators. The safest jobs are generally less predictable, including managers,

engineers, scientists, teachers and plumbers.

Figure 8: Job Loss to Automation by 2030 in Leading Economies

Job Loss to Automation by 2030 in Leading

Economies

Germany 17 mn

Mexico 18 mn

Japan 30 mn

USA 73 mn

India 120 mn

China 236 mn

0 50 100 150 200 250

Source: McKinsey

Nearly 69 per cent of jobs in India are under threat from automation, as the country, with its

relatively young workforce, is set to add 160 million new workers over the next 20 years Nearly

69 per cent of jobs in India are under threat from automation, as the country, with its relatively

young workforce, is set to add 160 million new workers over the next 20 years, a new report

showed on Monday.

48
The main priority for the country, set to reach a working population of 1.1 billion by 2040, will be

job creation to accommodate new workers entering the workforce, according to Forrester's 'Future

of Jobs Forecast'.

"India's workforce is young, with an average age of 38, and its working population will grow by

160 million over the next 20 years," said Michael O'Grady, principal forecast analyst at Forrester.

In addition, India's labour force participation rate, which measures the share of the working-age

population currently working, has dropped to just 41 per cent, he added.

The working populations in the five largest economies in Asia Pacific -- India, China, South Korea,

Australia, and Japan -- are more at risk due to physical robot automation than Europe and North

America.

By 2040, 63 million jobs are expected to be lost to automation, with more than 247 million jobs

expected to be in jeopardy across industries that are more susceptible to automation, such as

construction and agriculture, the report noted. "To prepare for the changes brought on by

automation, the five largest economies in APAC will have to radically rethink their workforce

strategies," said O'Grady.

"While each economy faces its own challenges, common focus areas such as hiring more female

workers can help offset working population declines. In addition, investing in STEM education,

technology workforce training, and protecting the rights of freelance workers will become of

utmost importance," he noted.

49
India, China, South Korea, Australia, and Japan will create 28.5 million new jobs in renewable

energy, green buildings, smart cities and smart infrastructure, and professional services by 2040.

But even with the creation of new jobs in areas such as the green economy and information and

communications technology (ICT) industries, 13.7 million jobs in the region will be lost to

automation across wholesale, retail, transport, accommodation, and leisure sectors.

By 2040, China will see its working population decline by 11 per cent, and 7 per cent of jobs will

be lost to automation.

"Job growth in the ICT industry will help offset automation job losses, with 3.8 million additional

new jobs created by 2040," said the report.

Due to an aging workforce and the country's low birth rate, between 2020 and 2040, Japan's

working population will contract by 19 per cent. By 2050, it is forecasted to decline by almost one-

third.

Table 3: Estimated Percentage of Potential Job Loss by 2040

Country % of Jobs Working Population Working Population

Threatened by AI Growth (by 2040) Decline (by 2040)

India 69% 160 million -

China 54% - 11%

50
South Korea 22% - 19.8%

Australia 46% - 6%

Japan 56% - 19%

Forrester Research: Future of Jobs Forecast

OBJECTIVE B: - To assess the preparedness of the Indian system, including

government policies and educational institutions to adapt to the changing job

market influenced by AI and automation.

India, like many other countries, is witnessing the transformative impact of artificial intelligence

(AI) and automation on its industries and workforce. To harness the potential benefits and mitigate

the challenges posed by these advancements, the Indian government has implemented various

policies and initiatives. Here are some key government policies in India aimed at adapting to the

advancements in AI and automation.

1. National AI Strategy: India launched the National AI Strategy in 2018, which focuses on

leveraging AI for economic growth, social development, and inclusive growth. The

strategy aims to promote research and development in AI, facilitate data sharing, and foster

collaborations between academia, industry, and government. This helps the government to

identify the sectors that will be most affected by AI transition in the coming years.

51
2. Skill India Initiative: The Skill India Initiative was launched in 2015 to enhance the

employability of the Indian workforce. It includes various programs such as the Pradhan

Mantri Kaushal Vikas Yojana (PMKVY) that provides training to individuals in emerging

technologies, including AI and automation. Such an initiative is very important to provide

skills to the Indian job seekers with respect to AI.

3. Atal Innovation Mission (AIM): AIM is a flagship initiative by the Indian government that

promotes a culture of innovation and entrepreneurship. It aims to support startups and

innovators in emerging technologies, including AI, through various programs such as Atal

Incubation Centers and Atal Tinkering Labs. This initiative by the government encourages

the corporated and the startups to skill their employees with the new AI technology, this

will avoid attrition.

4. National Skill Development Corporation (NSDC): NSDC is a public-private partnership

entity under the Ministry of Skill Development and Entrepreneurship. It works to bridge

the skill gap in India by promoting skill development initiatives and providing training

programs in emerging sectors, including AI and automation.

5. NITI Aayog: NITI Aayog, the premier policy think tank of the Indian government, has

been actively involved in shaping policies related to AI and automation. It has released

reports on AI strategies, including recommendations on workforce reskilling, AI adoption

in sectors like healthcare and agriculture, and the ethical use of AI.

6. Centre of Excellence in AI: The Indian government has established a Centre of Excellence

in AI (CoE-DSAI) in collaboration with industry partners and academic institutions. The

52
 CoE-DSAI aims to accelerate research and development in AI, promote skill development,

and provide a platform for industry-academia collaboration.

7. Start-up India: The Start-up India initiative launched in 2016 aims to nurture and support

the growth of startups in the country. It provides various incentives, tax benefits, and

funding opportunities for startups working in AI and other technology-driven sectors.

8. AI in Education: The Indian government has also initiated efforts to integrate AI in the

education sector. Initiatives like the Global Initiative of Academic Networks (GIAN)

program promote AI-related courses, research, and faculty exchange programs in

collaboration with international institutions.

The Indian government's policies and initiatives reflect its commitment to adapt to the

advancements in AI and automation. By focusing on skill development, start-up support,

regulatory frameworks, and digital infrastructure, India aims to harness the potential of AI for

economic growth, job creation, and social welfare. Continued collaboration between the

government, industry, academia, and other stakeholders will be essential to effectively navigate

the changing landscape shaped by AI and automation.

OBJECTIVE C: - To show challenges presented by AI integration in the Indian

job market.

The integration of artificial intelligence (AI) in the Indian job market presents several challenges
that need to be addressed. Some of the key challenges are:

1. Job Displacement: The adoption of AI and automation technologies has the potential to
replace certain job roles, leading to job displacement for certain segments of the workforce.

53
AI-powered automation may be more efficient and cost-effective, leading to reduced
demand for labor in certain industries.

Predicting the exact number of jobs that will be displaced by AI in the next decade is
challenging due to various factors such as the pace of technological advancement, industry-
specific dynamics, and the ability of the workforce to adapt to changing circumstances.
Estimates and studies on the impact of AI on jobs vary widely, and there is no consensus
on a specific figure. However, several reports and studies have provided insights into
potential job displacement scenarios:

i. World Economic Forum (WEF): According to a 2020 WEF report, by 2025, the
adoption of AI, automation, and robotics could lead to a net loss of over 85 million
jobs globally in medium to large-sized companies across 15 industries.

85 MILLION JOBS ACROSS 15 INDUSTRIES BY 2025

ii. McKinsey Global Institute: In a 2017 report, McKinsey estimated that between 400
million and 800 million jobs worldwide could be automated by 2030. However, it
also highlighted that new jobs could be created as a result of AI and automation.

BETWEEN 400 MILLION AND 800 MILLION JOBS

WORLDWIDE COULD BE AUTOMATED BY 2030

iii. PwC Analysis: PricewaterhouseCoopers (PwC) estimated in a 2018 report that

around 30% of existing jobs in the UK were at high risk of automation by the early
2030s. However, the report also suggested that the impact would vary across sectors
and that automation could create new job opportunities.

30% OF EXISTING JOBS IN THE UK WERE AT HIGH RISK OF

AUTOMATION BY THE EARLY 2030.

54
2. Skill Gap: The rapid advancement of AI requires a skilled workforce that can effectively
utilize and adapt to new technologies. However, there is a significant skill gap in India,
with a lack of professionals equipped with AI-related skills. Bridging this gap requires
significant investments in training and education programs.

ONLY 4% OF INDIAN PROFESSIONALS POSSESS THE NECESSARY

SKILLS FOR AI-RELATED ROLES (analytical India magazine)

3. Unequal Impact: The impact of AI integration in the job market may not be evenly
distributed across various sectors and regions. Certain industries and regions may
experience more significant disruptions, potentially leading to regional economic
disparities and income inequality if not addressed adequately.

4. Ethical Considerations: The use of AI raises ethical concerns related to privacy, bias,
transparency, and accountability. Developing and implementing ethical frameworks and
regulations to ensure the responsible use of AI is crucial to protect individuals' rights and
build trust in AI technologies.

AI BIAS, PRIVACY CONCERNS, AND LACK OF TRANSPARENCY

5. Job Redesign and Reskilling: The changing nature of jobs due to AI integration requires
job redesign and reskilling of the workforce. This process can be complex and time-
consuming, requiring significant efforts to identify the skills needed for future jobs and
implement effective reskilling programs.

54% OF THE INDIAN WORKFORCE NEED RESKILLING

6. Infrastructure and Connectivity: The successful integration of AI in various sectors relies

on robust digital infrastructure and connectivity. Access to reliable internet connectivity
and digital infrastructure is crucial for the adoption and utilization of AI technologies,
especially in rural and remote areas where connectivity may be limited.

55
 INTERNET PENETRATION IN INDIA IS 43% AS COMPARED TO 70%
IN CHINA AND 90% IN USA

7. Socioeconomic Impact: The socioeconomic impact of AI integration needs careful

consideration. While AI has the potential to drive economic growth and improve
efficiency, its impact on income distribution, job quality, and social welfare should be
carefully monitored and addressed to ensure a fair and inclusive society.

Addressing these challenges requires a collaborative effort between the government, industry,
academia, and other stakeholders. It involves investing in skill development, creating supportive
policies, fostering innovation, promoting entrepreneurship, and ensuring ethical and responsible
AI practices. By proactively addressing these challenges, India can better navigate the AI
revolution and maximize its benefits while minimizing potential negative consequences.

The advent of Artificial Intelligence (AI) has significantly influenced the Indian job market,

bringing both challenges and opportunities. Various studies and reports shed light on the profound

impact of AI on job displacement, job creation, and the shift in required skills.

a. Automation:

The integration of AI-driven automation technologies has resulted in job displacements across

multiple industries. According to the "Future of Jobs in India" report by Ernst & Young (EY) and

the Confederation of Indian Industry (CII), it is projected that the widespread adoption of AI and

automation will lead to a potential job loss of 20% to 30% across sectors by 2022. This shift is

primarily observed in sectors such as manufacturing, customer service, transportation, and other

industries that heavily rely on repetitive or routine tasks. Furthermore, the McKinsey Global

Institute report predicts that around 70 million jobs in India could be displaced due to AI-driven

automation by 2030.

56
b. Job Creation:

While AI-driven automation may lead to job displacements, it also creates new employment

opportunities in emerging AI-driven fields. The International Data Corporation (IDC) predicts a

substantial increase in AI-related roles in India. These roles are expected to grow by 46% annually,

resulting in the creation of nearly 750,000 new jobs by 2023. The demand for skilled professionals

in AI-related domains is evident as organizations across sectors, such as healthcare, finance, and

retail, are increasingly adopting AI technologies to enhance operational efficiency and gain a

competitive edge.

c. Skill Shift:

The impact of AI on the job market is accompanied by a significant shift in the skills required by

the workforce. A report by the National Association of Software and Service Companies

(NASSCOM) indicates that India will need approximately 200,000 AI professionals by 2021 to

meet the growing demand. LinkedIn data further emphasizes the surge in demand for AI-related

skills, including machine learning, data analysis, and natural language processing, and deep

learning. These emerging AI-related skills have witnessed a significant rise in demand as

organizations recognize the potential of AI technologies and seek to integrate them into their

operations.

AI has both positive and negative consequences for the Indian job market. While the integration

of AI-driven automation technologies may result in job displacements, particularly in sectors that

involve routine and repetitive tasks, it also creates new job opportunities in emerging AI-related

57
fields. The shift in required skills necessitates the up-skilling and reskilling of the workforce to

ensure alignment with the demands of an AI-driven job market.

Analysis and Interpretation

The impact of AI on the Indian job market is complex and multifaceted. The findings indicate that

AI-driven automation has led to job displacements in certain industries. Sectors such as

manufacturing, customer service, and transportation, which heavily rely on routine and repetitive

tasks, are particularly vulnerable to automation. The projected job loss of 20% to 30% across

sectors by 2022, as reported by Ernst & Young (EY) and the Confederation of Indian Industry

(CII), highlights the scale of this impact.

However, it is important to note that AI also brings opportunities for job creation. The research by

the International Data Corporation (IDC) reveals a significant increase in AI-related roles, with a

projected growth rate of 46% annually. This growth is expected to result in the creation of nearly

750,000 new jobs by 2023. Industries such as healthcare, finance, and retail are actively adopting

AI technologies, creating a demand for skilled professionals in AI-related domains such as data

science, AI research, and AI software development.

The shift in required skills is a significant aspect of the AI impact on the job market. The

NASSCOM report indicating the need for approximately 200,000 AI professionals by 2021

underscores the growing demand for individuals with AI-related expertise. The surge in demand

for skills such as machine learning, data analysis, natural language processing, and deep learning,

as indicated by LinkedIn data, further emphasizes the need for a skill shift in response to the AI

revolution.

58
These findings suggest that while automation may result in job displacements, the creation of new

job opportunities and the demand for AI-related skills present avenues for workforce adaptation.

To effectively navigate the impact of AI on the job market, individuals and organizations need to

invest in up-skilling and reskilling programs that address the emerging skill requirements.

Collaboration between educational institutions, industry stakeholders, and the government is

crucial to develop comprehensive training programs that equip individuals with the necessary

competencies in AI-related domains.

The Indian job market must undergo a transformation to ensure the workforce's readiness to

embrace AI technologies. Initiatives focusing on reskilling and up-skilling will be instrumental in

mitigating the negative consequences of job displacements and harnessing the opportunities

created by AI-driven job growth. Additionally, policymakers and industry leaders should

collaborate to create an ecosystem that fosters innovation, encourages investment in AI

infrastructure, and promotes the responsible and ethical use of AI technologies.

59
CHAPTER-4

60
COMCLUSION AND RECOMMENDATION

Conclusion

The impact of Artificial Intelligence (AI) on the Indian job market is undeniable. While AI-driven

automation poses challenges such as job displacements in certain sectors, it also presents

significant opportunities for job creation and economic growth. The findings highlight the need

for a comprehensive approach to address the evolving dynamics of the job market in the era of AI.

The job market in India is experiencing a significant transformation, with automation reshaping

traditional roles and creating demand for new AI-related positions. It is crucial to understand that

AI is not a singular force that will replace all jobs, but rather a tool that can augment human

capabilities and drive innovation across industries. Embracing this transformative technology

requires proactive measures to ensure a balanced and inclusive transition.

Recommendation

1. Invest in Skill Development: There is an urgent need to invest in reskilling and up-skilling

programs to bridge the skill gap caused by AI-driven job disruptions. Government

initiatives, educational institutions, and industry players should collaborate to design and

implement training programs that equip the workforce with AI-related skills. These

programs should encompass a wide range of skills, including data analysis, machine

learning, programming, and domain-specific AI applications.

61
2. Promote Lifelong Learning: In the age of AI, continuous learning is essential to remain

employable and adapt to changing job requirements. Employers should encourage a culture

of lifelong learning by providing learning and development opportunities for their

employees. Additionally, the government can support initiatives that promote accessible

and affordable lifelong learning platforms, ensuring that individuals have the resources to

acquire new skills throughout their careers.

3. Encourage Research and Development: Encouraging research and development in AI is

crucial to foster innovation and stay at the forefront of technological advancements. The

government should allocate resources and provide incentives to organizations and

academic institutions for AI research and development. Collaboration between industry,

academia, and research institutions can help drive innovation and address challenges

specific to the Indian context.

4. Facilitate AI Adoption: To maximize the benefits of AI, policymakers should create an

enabling environment for AI adoption. This includes developing supportive regulations,

promoting data privacy and security, and establishing ethical guidelines for AI usage.

Moreover, the government should invest in the development of AI infrastructure, including

high-speed broadband connectivity, advanced computing resources, and data storage

capabilities.

5. Promote Entrepreneurship and Startups: Encouraging entrepreneurship and supporting

AI startups can foster innovation, job creation, and economic growth. The government

should provide financial incentives, mentoring programs, and a conducive regulatory

framework to promote AI entrepreneurship. Creating an ecosystem that nurtures AI

62
 startups will not only stimulate economic activity but also attract investments and talent in

the AI sector.

6. Ensure Ethical AI Practices: As AI becomes increasingly pervasive, it is crucial to

prioritize ethical considerations. Policymakers and industry leaders should collaborate to

develop guidelines and regulations that ensure responsible AI deployment. This includes

addressing biases in algorithms, ensuring transparency, and safeguarding privacy and

security. Regular audits and evaluations of AI systems should be conducted to minimize

potential risks and ensure ethical standards are met.

The impact of AI on the Indian job market is a complex phenomenon. While automation may lead

to job displacements, the integration of AI technologies also creates new employment

opportunities and demands a shift in skills. By investing in skill development, promoting lifelong

learning, encouraging research and development, facilitating AI adoption, supporting

entrepreneurship, and ensuring ethical AI practices, India can navigate the AI revolution and

leverage its potential for economic growth and societal benefit. A strategic and collaborative

approach involving stakeholders from various sectors is essential to build a future-ready workforce

and ensure a sustainable and inclusive job market in the age of AI.

63
 Bibliography

BOOKS:

Indian Economics (13th Edition) McGraw Hills Publications

WEBSITES:

 https://www.orfonline.org/expert-speak/44485-will-ai-help-create-more-
jobs/?amp

 https://www.wikipedia.org/

 https://www.ibef.org/

 https://community.nasscom.in/communities/ai/impact-ai-future-job-roles

 https://www.worldbank.org/en/home

 https://www.ilo.org/

 https://www.csds.in/

64
 https://www.bbc.com/worklife/article/20230507-the-jobs-ai-wont-take-yet

 https://fortune.com/2023/05/27/ibm-ceo-arvind-krishna-job-loses-ai-
declining-populations/

 https://indianexpress.com/

 https://mospi.gov.in/94-labour-and-employment-
statistics#:~:text=The%20Labour%20Bureau%20in%20the,it%20was%20est
ablished%20in%201946

 https://labour.gov.in/sites/default/files/ar_2022_23_english.pdf

 https://www.statista.com/search/?q=Job+Loss+India+due+to+automation&S
earch=&qKat=search&newSearch=true&p=1

 https://niti.gov.in/sites/default/files/2019-01/NationalStrategy-for-AI-
Discussion-Paper.pdf

 https://indiaai.gov.in/research-reports/national-strategy-for-artificial-
intelligence

65