India's AI policy must protect youth employment and the democratic bargain

A unique vulnerability

India's economic model is uniquely susceptible to artificial intelligence because of its reliance on IT services and entry-level cognitive work. These sectors have been the primary drivers of middle-class growth and consumption since the country's post-liberalisation era. Because these professionals support employment in many other sectors, any disruption here has a ripple effect across the broader economy.

The risk profile for India differs significantly from that of advanced economies. While Western nations often deal with aging populations and labor shortages, India faces the challenge of absorbing its massive youth population into productive work. A technology that allows companies to operate with fewer people creates a different set of problems for a country struggling to create enough jobs for its young people.

Furthermore, the safety nets being discussed in wealthier nations may not be viable for India. Mechanisms like universal basic income or public equity stakes in AI companies are not currently available. This leaves the country without the same redistributive tools to manage the transition as other developed nations might use.

Breaking the career pipeline

One of the most concerning effects of AI is its impact on how people gain experience. Many routine tasks that AI can now perform are the exact same tasks through which inexperienced workers learn the ropes of a profession. If companies keep senior staff to review AI outputs while hiring fewer juniors, the pipeline for future professionals could dry up.

This shift could also impact the export economy. Foreign banks or retailers that previously outsourced coding or document processing to India might choose to perform that work internally using AI and smaller teams. Even if Indian firms find new opportunities, these gains may not translate into new jobs for the workforce.

Recent analysis shows that sectoral growth is already beginning to diverge from actual worker outcomes. While software exports continue to grow, the real earnings and employment levels for workers have weakened. This suggests that the impact of technology may manifest as an increase in lower-quality work rather than high-value career advancement.

The democratic bargain

The author of the piece argues that the democratic bargain relies on the expectation that hard work can improve a person's circumstances. If the routes to upward mobility narrow, higher productivity becomes a limited achievement for the general population. Policy must therefore be judged by whether it expands access to productive work rather than just measuring economic output.

Current unemployment rates are already substantially higher among young graduates than among the general youth population. A policy that only reacts to announced layoffs will fail to address the millions of people who are never hired in the first place. The goal must be to shape AI adoption in a way that expands productive opportunities for the most vulnerable groups.

To address this, the writer suggests that India needs a national AI and Work Observatory. This body would track the transition by monitoring entry-level recruitment, wages, and progression. It would provide the data necessary to understand how AI is actually changing the lives of workers on the ground.

Proposed policy reforms

To protect the workforce, the report suggests rebuilding pathways into work through sectoral apprenticeship arrangements. These programs would provide paid, supervised experience where workers use AI to solve real-world problems. The author notes that generic AI certificates are not a sufficient substitute for actual domain knowledge or professional judgment.

Existing workers also need protections, such as meaningful human review for any automated decisions made in the workplace. Additionally, portable social protection should accompany the transition to ensure workers are not left behind as the nature of their jobs changes. These measures should be part of a broader strategy to create demand for labor itself.

Finally, the transition requires democratic representation for those most affected. Workers and young people must have a voice in deciding how AI is adopted in their industries. A dedicated parliamentary committee could hear from small firms, state governments, and young people to ensure that technology strengthens human capabilities rather than replacing them.