Context: In a study called “Generative AI at Work” (involving over 5,000 customer support agents in the Philippines), Massachusetts Institute of Technology (MIT) economists showed that AI tools boosted worker productivity by 14% and improved consumer satisfaction, leading to better treatment of customer service agents and increased employee retention.
Artificial Intelligence (AI)
Artificial intelligence (AI) refers to the simulation of human intelligence in machines and is concerned with developing computer-operated machines that can complete tasks that typically require human intelligence.
|Generative AI Generative artificial intelligence (AI) is a form of AI that can autonomously generate new content, such as text, images, audio, and video.|
Benefits of AI
- AI through automated decision-making by can reduce error in decision making.
- AI can automate repetitive tasks and with generative AI, even creative tasks can be done efficiently and fast.
- In health sector with the help of AI patient monitoring including elderly patient monitoring, early diagnosis and process simplification can be done efficiently.
- AI will “augment” the productivity of the labour force with the help of technologies and by automating some tasks and roles.
- We can solve complex problems by leveraging AI’s ability to analyse massive volumes of data quickly and spot patterns that we wouldn’t otherwise be able to.
- Intelligent automation (AI) can help by establishing a new virtual workforce that is capable of problem-solving and self-learning while increasing labour productivity.
- Personalization enabled by AI will improve customer satisfaction and experience, which in turn will boost engagement and assist businesses in better consumer targeting and economic growth.
- AI can assist early warning systems and disaster management by analysing historical data, patterns, and trends and monitoring real-time data to identify potential dangers.
- Through assistive-personalised technology, monitoring of environmental changes, etc., AI can enhance people’s quality of life.
Challenges of AI
- Labour replacement by AI technologies. E.g., Chatbot replaced human assisted consumer support
- A research paper titled “Robots and Jobs: Evidence from US Labor Markets” of MIT and Boston University found that robot adoption has a negative effect on workers, on average — it reduces the labour share, employment and wages.
- The adverse effects of AI primarily affect blue-collar workers and individuals with lower levels of education as they lack the required skill in AI driven economy.
- “Tasks, Automation, and the Rise in U.S. Wage Inequality”, report document that between 50% and 70% of changes in the U.S. wage structure over the last four decades can be attributed to relative wage declines of worker groups specialised in routine tasks in industries experiencing rapid automation
- Automation by AI may reduce labour share and wages, especially when productivity gains from automation are small.
- There are distributional concerns of over automation due to AI which may cause inequality among workers and possible serious negative impacts on social welfare. E.g., tax challenge in AI
- McKinsey Global Institute’s research suggests that AI may intensify competition and deepen the technological divide among firms.
- Early adopters of AI may gain significant advantages, leading to a winner-takes-all scenario.
- AI could be highly disruptive as it is more likely to displace middle-class, white-collared jobs which constitute the major proportion of Indian population; in comparison to earlier technological advancements displaced people from lower-paid farm jobs to higher-paid factory floor jobs.
- AI could create deep challenges for society, including in the labour market, politics, data privacy, crime and warfare; these challenges are difficult to anticipate and plan for.
Opportunities for India
- The PwC report suggests that the greatest economic gains from AI will come from China, with a projected 26% boost to GDP by 2030. Thus, India should focus more on education and training in AI to take advantage of the demographic dividend and new opportunities that emanate from it.
- Governments should step up their cyber regulations with respect to the new challenges posed by AI and may also need tax capital to balance the returns from capital and labour to reduce the displacement and distributional effects.
- Artificial intelligence (AI) can transform the productivity and GDP potential of the Indian economy. Strategic investment in different types of AI technology is needed to make that happen.
- Regulation on the use of AI should be balanced and provide ample opportunities for the required investments in AI.
- With ever-growing advancements in AI are now a reality and equipping ourselves with the latest tools will help us forge ahead along with everyone else.