India’s vast workforce may not face the sweeping job losses feared in some other economies as artificial intelligence becomes more widely adopted, according to Goldman Sachs Group’s Chief India economist Santanu Sengupta. Speaking to Bloomberg Television’s Menaka Doshi on Friday, Sengupta said the nature of employment in India could help limit the immediate impact of AI on jobs. While some occupations, particularly in services, are likely to face disruption, he expects the overall effect on employment to remain relatively contained.

“The main reason is because our workforce is pretty large, and a lot of them are in more mechanical or physical kind of tasks,” he said, according to a Bloomberg report.

Sengupta pointed out that a major portion of India’s workers are employed in sectors where AI currently has limited ability to replace human labour.

Construction and retail trade together employ around 40 per cent of India’s workforce, according to Sengupta. These sectors, he said, have so far remained relatively insulated from the direct effects of artificial intelligence. “It’s not really getting impacted by AI currently,” he said. “It’s the services sector which is getting impacted.”

The greater exposure is therefore concentrated in areas where work involves information processing, communication and other tasks that can increasingly be supported or automated by AI tools.

However, Sengupta said the timing and manner in which companies introduce the technology could play a crucial role in determining its impact on employment. Goldman Sachs estimates that a carefully sequenced AI rollout could raise overall productivity by 0.4 percentage points over 10 years.

Productivity Gains Could Offset Job Losses

Sengupta believes India could potentially gain more from AI than it loses in terms of employment if businesses adopt the technology gradually rather than replacing workers too rapidly.

If AI is introduced in a phased manner, India could see “the productivity benefits which will outweigh the potential job losses that you can have over a five-year period,” Sengupta said.

Several sectors are also expected to gain from greater AI adoption. Finance, healthcare, education and business services are among the areas where the technology could improve productivity and create new opportunities.

At the same time, the transition will not be without risks. “There will be some substitution risks” mainly in postal and telecommunication and IT services, particularly in call-center jobs.

India’s Economic Resilience Surprises Goldman Sachs

Sengupta also stressed the resilience of the Indian economy, saying its performance has exceeded some of Goldman Sachs’ expectations despite challenges such as dependence on imported oil. India continues to rank among the fastest-growing major economies. Inflation increased only modestly last month and remained within the Reserve Bank of India’s 2 per cent -6 per cent tolerance range, states the report.

Domestic demand has also remained strong. Vehicle sales have reached record levels, credit expansion has climbed to a two-year high and Goods and Services Tax collections have posted double-digit growth. “We thought that the Middle East shock would be a big dent in terms of growth, but we think the economy has been very resilient through the early part of the shock, at least, and it looks like it is behind us.”

RBI Rate Hike Outlook

Sengupta also offered an outlook on the Reserve Bank of India’s monetary policy. The central bank kept its policy rates unchanged earlier this month for a fourth consecutive meeting. According to the Goldman Sachs economist, the RBI could start increasing interest rates from December if core inflation accelerates. However, a slower rise in underlying price pressures could push the first hike to February, followed by another increase in April.

“But we are really looking at a very shallow hiking cycle,” he said.

Sengupta added that inflows through foreign-currency deposits and external commercial borrowings could provide the RBI with some room to manage movements in the rupee while navigating potential inflationary pressures.

Overall, Goldman Sachs’ assessment suggests that AI is likely to alter the composition of India’s employment landscape rather than trigger widespread job displacement in the near term. The services sector could face the sharpest adjustment, while industries dependent on physical and mechanical work may remain comparatively less exposed.

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