Economic Survey 2026: India has formally acknowledged that insufficient investment and limited capacity in Artificial Intelligence are restricting its global influence, and has outlined a long-term plan to change this.
The Economic Survey 2025–26 elevates AI as a national strategic priority, arguing that future economic growth and geopolitical relevance will depend on how effectively the country builds AI capability.
Marking a clear shift in policy thinking, the Survey dedicates a full special essay to Artificial Intelligence, arguing that weak AI infrastructure and fragmented data systems now pose strategic risks rather than mere technical challenges.
This concern is placed in a global context, with the document citing indicators such as the Lowy Institute’s Power Gap Index, where India continues to rank low in converting potential into actual geopolitical influence.
According to the Survey, AI has the capacity to raise productivity across sectors, strengthen governance and decision-making systems, and improve India’s integration into global economic networks. These gains, it argues, are essential if India is to bridge its widening strategic power gap in Asia.
To achieve this, the government proposes an “Entrepreneurial State” approach, under which public institutions would take early risks to build long-term AI capability. A key institutional reform under consideration is the creation of an AI Economic Council, envisioned as an apex body to coordinate ministries, guide investments, and ensure that AI development aligns with national priorities.
A central theme of the Survey is the treatment of data as a strategic national resource. It argues that government data must move beyond siloed administrative use and be made interoperable and AI-ready.
The proposed National Metadata Structure (NMS) 2.0 aims to standardise public datasets across departments, enabling their use in AI development while remaining compliant with data protection and competition laws.
Recognising the disruptive potential of AI, the Survey outlines a phased adoption strategy. In the near term, the focus will be on institutional readiness, common data standards, and pilot projects, including low-cost AI applications for agriculture and public services. Over the medium term, public investment is expected to shift toward domestic computing capacity, skill development, and safety frameworks.
In the long run, the Survey envisions AI being embedded into advanced manufacturing and high-value services, allowing India to secure a non-substitutable role in global supply chains and reduce dependence on external technological ecosystems.
However, the document also flags serious constraints. India faces a shortage of affordable computing power, with most global data centres located in high-income countries. High electricity costs and logistical challenges further limit the feasibility of large-scale AI infrastructure within the country.
Given these limitations, the Survey argues that India cannot rely solely on hardware-intensive models of AI growth. Instead, it calls for the development of energy-efficient, cost-effective “frugal AI” systems tailored to local needs and conditions.
Another challenge identified is the lack of high-quality training data. The Survey points to gaps in large-scale dataset curation, limited availability of multilingual data reflecting India’s diversity, and the absence of systems that can convert raw public records into AI-ready formats.
Addressing these gaps, it notes, will require coordinated public investment and stronger participation from startups and research institutions.
On employment, the Survey adopts a cautious but optimistic outlook. Drawing lessons from advanced economies, it suggests that AI is more likely to automate specific tasks rather than eliminate entire occupations. Productivity gains are expected, particularly in services, while workers who can effectively use AI tools are likely to command higher wages.
Overall, the Economic Survey delivers a clear strategic message: unless India closes its AI investment and capacity gap, its ambitions for economic leadership and global relevance will remain constrained.
By combining public funding, data reform, skill development, and locally efficient innovation, the government aims to turn a current weakness into a long-term strategic advantage.
