The AIdea of India: Generative AI's potential to accelerate India's digital transformation

Global institutions like the World Bank and the IMF recognize India’s economy as the fastest-growing among major nations. Our study indicates that India could experience a substantial boost in its GDP over seven years (2023-24 to 2029-30). The cumulative impact on GDP may range from US$1.2 trillion to US$1.5 trillion, contributing an additional 0.9% to 1.1% in annual CAGR. Given the immense capability of Gen AI with respect to its productivity and efficiency enhancing effects, its adoption has the potential to accelerate India’s growth trajectory. It is, therefore, necessary to increase investment in Gen AI, education and upskilling to fully capitalize on the demographic dividend.

The agenda for enterprises is clearly cut out. In the face of imminent digital transformation, the shift to an AI-first approach goes beyond implementing chatbots or experimenting with trendy tools. It demands a complete reimagination of the Digital Transformation strategy, leveraging AI alongside digital, cloud, and automation capabilities. This enables the emergence of new business models, widespread personalization and accelerated product and service innovation, in addition to the integration of Gen AI co-pilots and auto-pilots for intelligent automation and decision-making across processes and personas. Unlike other emerging technologies, Gen AI is now easily accessible on demand, simplifying the establishment of the technological foundation. Development of a clear enterprise AI and Gen AI strategy is paramount.

The Indian government recognizes the economic potential of AI and some public figures have called for a sharper India strategy for AI development. In line with the development of Digital Public Infrastructure such as the India Stack, Aadhaar, UPI, etc., the government can consider developing Gen AI systems as Public Goods. The development of indigenous training data sets (especially for local Indian languages) will be very important. The government may invest in creation of structured and unstructured datasets, which can be opened to the public.

The government could ensure access to critical digital infrastructure (through roll-out of 5G, data center development, access to specialized chips and AI specific compute infrastructure), along with policies that cultivate and attract specialized talent.