The Economic Survey 2025–26 cautions that in a worst-case global scenario, rapid AI-led disruption could unleash a systemic shock with consequences “worse than the 2008 global financial crisis,” posing
a serious risk to India’s IT-driven white-collar employment base. Though assigned only a 10–20% probability, the scenario outlines a cascading breakdown where technological excesses, geopolitical tensions and financial stress converge, with particular vulnerability in AI-heavy infrastructure segments dependent on long-term capital, limited clients and aggressive growth assumptions.
A sharp correction in these areas—especially if compounded by trade disruptions or geopolitical flare-ups—could drain global liquidity, stall capital flows and push economies into defensive policy responses. The Survey warns that the macroeconomic fallout in such a case could surpass the damage seen during the 2008 crisis.
For India, the concern centres on its IT and services workforce. Using trends in the US Professional, Business and Information Services sector as a reference, the Survey notes a structural shift after generative AI adoption accelerated post-December 2022, with economic growth no longer translating into commensurate job creation. Employment has not collapsed, but the link between output and hiring has weakened, signalling a gradual softening in demand for roles involving routine cognitive tasks such as information retrieval and summarisation.
The Survey adds that this pattern is concentrated in highly digitised sectors, with less-digitised industries showing no similar break, suggesting AI’s impact is focused on technology and white-collar functions. India’s long-standing model of offering cost-effective IT services to global clients may therefore face pressure as AI tools perform similar tasks more quickly and cheaply. To manage the transition, the Survey proposes setting up an AI Economic Council to steer responsible adoption while safeguarding employment.
