'AI Not Threat, Tech Raises Productivity': Dr Arvind Panagariya At NDTV Business Conclave

Artificial Intelligence, like any new technology, will destroy new jobs but also create new ones, Chairman of the 16th Finance Commission Dr Arvind Panagariya said during a fireside chat at the NDTV Emerging Business Conclave. He added that new technologies are known to raise productivity, reduce cost of production and expand economic activity.

Dr Panagariya said that in adopting new technologies, as tried by companies like Tesla and Adidas, the key factor is if automation will make the production process less costly. "Adidas opened automated facilities in Germany and the US, but had to move back to China," he cited an example.

The economist said that Micro, Small and Medium Enterprises (MSME) remain a source of employment, but their growth is critical to ensure they remain productive in the race towards the 2047 Viksit Bharat goal.

Talng about skilling in MSMEs, Dr Panagariya said skill education helps, but the learning is always on the job. He added that capital is also needed to ensure skilling. "If the ecosystem they work in is large or medium, workers have to up their game. If the ecosystem is defined by less capital, there is no drive to acquire skills," he said. He also said that part of the problem that plagues India's MSME sector is the lack of medium enterprises.

Dr Panagariya said the success of MSMEs lies in ramping up production, which likely takes rural areas and turns them urban. "In Schengen, which started as a bunch of fishing villages is the most urbanised region on the Earth," he said, crediting the power of industrialisation.