Union Budget 2025 | Social, resource cost of AI adoption calls for regulatory changes

Bengaluru: India may have thrown itself into the ongoing global race for artificial intelligence (AI) adoption, but this journey is fraught with challenges that need to be addressed at the policy level, the Economic Survey 2024-25, tabled on Friday pointed out.

At the centre of these concerns are the technology’s reliability, resource inefficiencies and infrastructure deficits. Also challenging the adoption of AI low-skill and low value-added services proffered by the country’s workforce. 

“Although the impact of AI on labour will be felt across the world, the problem is magnified for India, given its size and its relatively low per capita income,” the survey said.  A lot of faith, in addressing the labour vulnerability to this emerging technology, is being reposed on robust institutions that will help transition workers to medium or high-skilled jobs, so that AI augments their efforts, rather than replace them.

With India ardently courting setting up of data centres, the Economic Survey also touched on the demands the sector will make on the country’s already strained resources. These facilities are established as major consumers of electricity. The data centres functioning presently across the global draw as much power as Italy, Taiwan, Australia, Spain and Malaysia put together. Going forward, the proliferation of these centres only portend more power demand.  A recently published Bloomberg analysis estimated that powering data centres for AI around the world is expected to reach up to 1,580 terawatt-hours by 2034, which is as much electricity as India consumes today.

Hardware used for AI guzzles water for cooling, and much of it is of potable quality. One estimate is that cooling presently takes up a billion litres of water a day.  Then again the sprawling data centres risk displacing essential land use. The survey underscored that without ground-breaking innovations and strategies to make AI scaling economically viable—both financially and in terms of resource consumption—efforts to democratise AI will jeopardise critical global priorities such as energy security, water security, and even housing or food security. 

Given the experimental status of AI, the survey suggested that there’s a window for policymakers to act. Hence, significant investments in education and workforce skills can help workers adapt to changing demands while providing essential safety nets.

However, regulations can only go to a certain extent, which is why the corporate sector will have to chip in some responsibility, the document noted. If not, the state will have to resort to taxation of profits generated from the replacement of labour with technology to mobilise those resources.

Union Budget 2025 | Nirmala Sitharaman, who continues to be Finance Minister, will present her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', reports suggest there might be a tax relief for those making up to Rs 15 lakh per year. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.