New Delhi: When economists meet the finance minister ahead of the Budget, the conversation usually focuses on growth, fiscal policy, deficit and investment. It was no different on Wednesday when most of the discussion with FM Nirmala Sitharaman saw proposals to push private investment, job creation, sticking to the path of fiscal prudence, while also keeping an eye on the overall debt, and managing food inflation.
Like most discussions these days, artificial intelligence too came up during the meeting, with at least one economist referring to its increased use and the impact that it can have, especially on employment.Another economist, while referring to it, is said to have suggested the possibility of exploring “robot tax”, which can be used to reskill and rehabilitate workers who are displaced.
The recommendation comes days after a paper by the IMF, while noting that AI can boost overall employment and wages, argued that it can “put large swaths of the labour force out of work for extended periods, making for a painful transition”. While it spoke against the imposition of “robot tax”, it suggested reassessment of labour policies and social protection mechanisms.
It suggested greater focus on skilling and sector-based training, apart from broadening the coverage and generosity of unemployment insurance and considering some forms of wage insurance. The paper recommended that countries can reconsider the design of current corporate tax systems in how they incentivise investments in automation.
In an interview on Tuesday, IMF first deputy MD Gita Gopinath suggested that challenges for developing countries may be bigger as they do not have large social safety nets.
“If you look at the fraction of young people who are neither in school, nor working or in any kind of training, that number is much higher than in advanced economies. Which means that their ability to either benefit from the transition or adapt to the transition is going to be more difficult. These are areas where developing countries will have to invest more in trying to provide a stronger digital infrastructure, more education and training so that they can also benefit from this technology,” she said.
Economists said the full implication of how the technology plays out is still unclear and it will result in large productivity gains for the economy. Besides, they said it may lead to the creation of new kinds of jobs, although govt may have to prepare to deal with the challenges. While any steps in the Budget may not necessarily be taken this time, AI may find a mention in the Economic Survey, which is due to be tabled ahead of next month’s Union Budget.
Like most discussions these days, artificial intelligence too came up during the meeting, with at least one economist referring to its increased use and the impact that it can have, especially on employment.Another economist, while referring to it, is said to have suggested the possibility of exploring “robot tax”, which can be used to reskill and rehabilitate workers who are displaced.
The recommendation comes days after a paper by the IMF, while noting that AI can boost overall employment and wages, argued that it can “put large swaths of the labour force out of work for extended periods, making for a painful transition”. While it spoke against the imposition of “robot tax”, it suggested reassessment of labour policies and social protection mechanisms.
It suggested greater focus on skilling and sector-based training, apart from broadening the coverage and generosity of unemployment insurance and considering some forms of wage insurance. The paper recommended that countries can reconsider the design of current corporate tax systems in how they incentivise investments in automation.
In an interview on Tuesday, IMF first deputy MD Gita Gopinath suggested that challenges for developing countries may be bigger as they do not have large social safety nets.
“If you look at the fraction of young people who are neither in school, nor working or in any kind of training, that number is much higher than in advanced economies. Which means that their ability to either benefit from the transition or adapt to the transition is going to be more difficult. These are areas where developing countries will have to invest more in trying to provide a stronger digital infrastructure, more education and training so that they can also benefit from this technology,” she said.
Economists said the full implication of how the technology plays out is still unclear and it will result in large productivity gains for the economy. Besides, they said it may lead to the creation of new kinds of jobs, although govt may have to prepare to deal with the challenges. While any steps in the Budget may not necessarily be taken this time, AI may find a mention in the Economic Survey, which is due to be tabled ahead of next month’s Union Budget.
