The Reserve Bank of India predicts that generative artificial intelligence will contribute up to US$438 billion to India's GDP between 2029 and 2030, noting that India has unique advantages in the field of AI. The editor of Downcodes will give you a detailed interpretation of the important speech delivered by Michael Debabrata Patra, Deputy Governor of the Reserve Bank of India, at the Conference on Digital Technology, Productivity and Economic Growth, and analyze the opportunities and challenges in the development of artificial intelligence in India. , and how digitalization is driving change in India’s financial sector.
Recently, the Reserve Bank of India (RBI) issued an important prediction at the Digital Technology, Productivity and Economic Growth Conference, saying that generative artificial intelligence (Gen AI) will contribute to India's gross domestic product (GDP) in 2029-2030. A whopping $438 billion. At the same time, the proportion of Indian companies integrating artificial intelligence in the production process has increased from 8% in 2023 to 25% in 2024.
Picture source note: The picture is generated by AI, and the picture authorization service provider Midjourney
Michael Debabrata Patra, deputy governor of the Reserve Bank of India, pointed out that India has currently committed to investing 1.25 trillion rupees to develop the semiconductor industry. Based on growth trends in recent years, the digital economy is expected to account for one-fifth of India's GDP by 2026, up from about one-tenth currently. He said that India has a rich talent pool in the field of artificial intelligence and has the unique advantage of further exploring and optimizing growth opportunities through digital public infrastructure, a booming information technology industry, and a young population.
He also mentioned that India is at the forefront of the digital revolution in the field of financial technology, and the rapid development of digital payments is also driving this process. However, the emergence of new technologies also brings many challenges, such as disruptions to traditional technologies and the labor market, high demand for resources, and potential cybersecurity threats and data privacy issues.
Talking about how digitalization is driving India’s financial sector, Patra provided micro-level evidence showing that all Indian banks have implemented mobile and internet banking, with 75% offering online account opening and digital KYC services, 60 % make digital loans, 50% offer payment aggregation services, and 41% use chatbots. Digitalization has brought significant productivity gains to the banking industry.
He also cited the launch of the Unified Payments Interface (UPI) in 2016 as a major milestone, reaching 16.6 billion transactions in October, with successful instant debit withdrawal rates rising to 86% from 77% last year. In addition, the concept of embedded finance is also developing rapidly, with the global market estimated to reach US$66.8 billion in 2022 and expected to achieve an average annual growth of 25.4% between 2023 and 2032.
About 40% of India's rural population and the Internet usage rate among the 20-30 age group is as high as 78%. As more and more households consume online, Indian financial technology companies are providing various technical solutions to small and medium-sized enterprises to help them optimize operations. Finally, Patra mentioned that India is also cooperating with international organizations to explore the connection of open financial API frameworks in different countries and promote the balance between risk management and financial innovation.
All in all, India shows great potential in the fields of artificial intelligence and digital economy, but it also faces many challenges. Going forward, balancing development and risk will be key. The editor of Downcodes will continue to pay attention to India's progress in the digital economy, so stay tuned!