The Economic Survey 2025-26 warns that a worst-case global scenario, driven by AI could trigger a systemic shock with consequences "worse than the 2008 global financial crisis," posing a direct threat to India's IT-driven white-collar job engine.
This low-probability but high-impact scenario, assigned a 10-20% chance by the Survey, envisions a cascading failure where technological overreach, geopolitical escalation, and financial stress collide. The Survey flags a specific vulnerability in the AI-heavy infrastructure sector, where business models rely on long-duration capital, narrow customer bases, and ambitious timelines.
A correction in that segment, amplified by geopolitical shocks or trade disruptions, could shrink global liquidity, freeze capital flows, and force economies into defensive responses. "The macroeconomic consequences," the Survey cautions, "could be worse than those of the 2008 global financial crisis."
For India, the implications are stark. The Survey highlights a deepening risk to the country's IT and services workforce, long seen as the backbone of its white-collar employment. Using the U.S. Professional, Business, and Information Services sector as a proxy, it identifies a sharp structural break after December 2022, when generative AI went mainstream, where GDP growth no longer translates into proportional job gains.
This decoupling is subtle but significant. "Jobs haven't vanished overnight," the Survey notes, "but the employment response to output growth is now flatter." The result is a "quiet drift" in labor demand for roles tied to information retrieval, summarization, and routine cognitive work.
This drift, it warns, is not happening across the board. A falsification exercise showed that less-digitized sectors saw no such job-output break-indicating the AI disruption is laser-focused on tech and white-collar roles.
India's traditional model, providing low-cost IT services to global firms, is now at risk. As AI increasingly performs those tasks faster and cheaper, the country's competitive advantage erodes. The Survey proposes an AI Economic Council to guide responsible adoption and protect employment.
