India likely to handle AI-led disruption proactively
The Economic Survey 2026 provides some interesting facts about the growing digital economy of India and its side effects. It also provides a glimpse into how digital technologies like AI are reshaping the country’s numerous sectors. The survey pointed out that the mature IT services industry, growing startup ecosystem, and increasing user base of internet-enabled services put India as one of the biggest generators of data. Currently, the country generates around 20 per cent of all global data. But most of the data is stored outside the country as India has only three per cent of global data centres. This creates huge opportunities for creating a vibrant data centre ecosystem in the country.
According to the survey, the data centre capacity is expected to reach about 8 GW by 2030, up from 1.4GW in Q2 of 2025. If realised, this will translate into growth for the real estate sector, electronic equipment manufacturers, power generators in both traditional and renewable space, and public services. Not to mention, such growth will create more jobs in the technology and related segments apart from accelerating the pace of urbanisation. Similarly, the AI wave is likely to benefit the Indian economy in multiple ways, according to the Survey. However, it recommends adoption of AI technology in phases.
The survey pointed out that India is a labour-rich economy and unbridled use of AI in replacing human labour will create social instability. Therefore, it calls for social mapping of sectors regarding labour displacement that may happen due to AI. It indicates that the government is quietly doing its work of labour displacement mapping in sectors like IT services. Notably, global technology firms have laid off thousands of employees in the last two years as AI adoption makes many jobs redundant. In contrast, the IT industry did not see any heavy layoffs despite AI making serious inroads.
Therefore, one can state that the industry and the government are in touch to avoid any large-scale job losses, which could create panic in the industry. Lastly, the Economic Survey highlighted a pertinent threat faced by the Indian society due to internet penetration. For the first time, the Centre has acknowledged that rapid rise of digital addiction and screen-related mental health issues are being seen due to smartphones, internet, gaming and social media addiction. Mental health issues have especially been prominent among teens.
Moreover, social media is creating mental health issues among people, creating negative feelings like inferior complexity, comparison and loss of self- esteem among others. Owing to such outcome, the survey has recommended introduction of age-based restriction on use of social media. Notably, Australia has already introduced restrictions on usage of social media for young people. France is likely to follow suit. Against this backdrop, it should be anticipated that India may introduce some restrictive measures on unbridled usage of social media in the coming years. Interestingly, the survey also flagged up risks arising from concentration of global LLMs. It stressed on the importance of having technology sovereignty that will be vital for the country’s tech ecosystem.
Overall, this year’s Economic Survey’s findings about the digital economy indicate what’s
up in the years ahead. With India set to hold the Global AI Summit in the coming months, the survey’s threadbare analysis shows that the government will be proactive in handling the AI wave rather than reacting to its outcomes later. This augurs well for the Indian economy given AI’s disruption potential.
