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Informist, Thursday, Jan. 29, 2026

 

--EconSurvey: Fincl system needs to improve regulations, manage AI risks 

--EconSurvey:AI-intensive svcs exports growth faster vs less AI-exposed ones 

--EconSurvey: India's late AI transition confers underappreciated advantage 

--EconSurvey:India's AI strength in app-led innovation, use of domestic data 

 

NEW DELHI – India's position in the artificial intelligence landscape is unique, with application-led innovations and leveraged domestic data as key strengths, according to the Economic Survey for 2025-26 (Apr-Mar), tabled in Parliament by Finance Minister Nirmala Sitharaman Thursday. The survey highlights India's late entry into the AI transition is an "underappreciated advantage", allowing the country to learn from early adopters' mistakes and design resource-efficient AI systems.

 

"India's position as a relatively late mover in the AI transition also confers an underappreciated advantage," Economic Survey said. "Early adopters who scaled AI under conditions of a regulatory vacuum and cheap capital have now locked themselves into circumstances that are very difficult to back away from. This includes a commitment to energyintensive architectures that are detrimental to the environment and mounting financial commitments with unclear revenue pathways. With the sums of money involved, discussions surrounding government backstops have emerged as possible insurance against a fallout, in the advanced economies."

 

The Economic Survey also highlights the need for the financial system to improve regulations and manage AI risks. Additionaly, the survey said AI-intensive services exports have grown faster than less AI-exposed ones. India's task now is to ensure AI development aligns with its developmental priorities and long-term economic resilience goals. 

 

Further, the Reserve Bank of India found AI adoption in Indian finance is still nascent, with only about 21% of surveyed banks and financial institutions implementing or developing AI solutions. Larger banks are leading the charge, while smaller urban cooperative banks and NBFCs struggle with resource constraints like poor data infrastructure, limited skilled talent, and tight IT budgets. Even early adopters are using AI for basic tasks like process efficiency, customer interactions, lead generation, and internal decision support, rather than complex autonomous decision-making.

 

The RBI's FREE-AI framework fosters innovation and robust risk management, treating them as complementary forces. It supports the India AI Mission and aligns with the Digital Personal Data Protection Act. This positions India as an AI governance leader, setting an example for emerging economies to balance innovation with social responsibility. 

 

Going forward, India's AI strategy needs careful sequencing to avoid premature commitments or over-regulation. The approach should focus on building coordination, developing capacity, enabling institutions and markets to evolve together.

 

"The first phase should focus on operationalising already announced institutions and aligning incentives to enable experimentation," the Economic Survey said. "Policy should enable bottom-up innovation by expanding the reach of the existing shared infrastructure under the IndiaAI Mission. This includes a government-hosted community-curated code repository and pooled access to public datasets, facilitated by initiatives already underway to enable shared access to computing infrastructure. A clear focus on application- or sectorspecific, small and open-weight models will enable efficient resource utilisation."

 

Data governance should evolve under the Digital Personal Data Protection Act framework, introducing data categorisation and auditability requirements for large-scale AI training. This should be paired with incentives for domestic value retention, like menu-based contribution pathways. Human capital pipelines, particularly the 'earn-and-learn' pathways and curricular flexibility, should be scaled using existing legislative and budgetary levers.

 

Going forward, the choices made over the coming few years will determine whether AI deepens existing structural divides or becomes a tool for broad-based productivity and dignified work. India's task is to ensure that AI development remains aligned with its developmental priorities and its long-term ambition to achieve economic resilience, according to the Economic Survey.  End

 

Reported by Vaishali Tyagi

Edited by Avishek Dutta

 

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