India’s Economic Survey 2025-26, tabled just ahead of the national budget on February 1, paints a clear picture of a rapidly evolving job market shaped by artificial intelligence (AI), technological disruption and persistent skill gaps. While the country’s economy continues to grow steadily, policymakers are increasingly prioritising skills development and AI-related preparedness to ensure its workforce can thrive in a competitive global environment.
The report highlights a significant mismatch between available skills and industry demand, particularly in emerging technology sectors. Formal vocational and technical training remains limited: only about 4.9% of youth aged 15-29 have received structured, certified training, while a larger 21.2% gain skills informally. Expanding access to effective skilling programmes could potentially boost employment by over 13%, pointing to a direct link between skill gaps and job creation.
AI is central to the survey’s narrative. The government proposes a vision where AI becomes a public good, hinting at platforms akin to India’s widely adopted UPI payments system that could democratise access to foundational AI tools and data for businesses and citizens alike. However, the Survey also cautions against chasing high-end, frontier AI development without clear use-cases and infrastructure to support it. Given constraints in capital, computing power, and energy, policymakers argue that practical, sector-specific AI applications, particularly those that create jobs and boost productivity, should take precedence.
This pragmatic stance is echoed in concerns about the IT sector, where rapid AI adoption is reshaping labour demand. India risks structural imbalances if its workforce isn’t equipped for next-generation digital roles; companies face uncertainties as global model power concentrates and competitive pressures intensify.
Beyond policy prescriptions, the survey underscores the importance of turning learning into livelihoods. Existing skilling programmes must evolve so that training leads directly to sustainable employment or entrepreneurship, rather than remaining disconnected from market realities.
In essence, India’s Economic Survey calls for a multi-pronged strategy: rapidly upskill young workers, embed AI into practical economic use-cases, and align education with industry needs to ensure the next decade’s growth is both inclusive and innovation-driven.