AI and Economic Liberalisation: Structural Challenges for India's Workforce and Governance

Indian Express - Opinion · 18 Jul 2026 · 2 min read
Prelims · Economy Mains · GS3 Economy High relevance

The article critiques India's post-1991 economic liberalisation model, highlighting how AI exacerbates existing inequalities and job precarity for Generation Z, necessitating a reevaluation of economic governance.

Key points

1991 Economic Reforms initiated by Finance Minister Manmohan Singh dismantled the Licence Raj, promising global integration and poverty reduction, but have led to corporate concentration and precarious employment.

Generation Z faces a transformed labour market dominated by gig work, contract labour, and algorithmic management, contrasting with the stable employment opportunities available to previous generations.

AI-driven automation threatens to eliminate jobs in sectors like IT, customer service, and logistics, exacerbating unemployment and underemployment among educated youth.

Economic concentration has shifted from bureaucratic barriers to capital and technology monopolies, with a few conglomerates dominating the economy, reducing competitive markets.

[GS3-Economy] The rise of algorithmic precarity highlights governance gaps in regulating AI and protecting workers' rights in a digital economy, connecting to labour law reforms.

Universal Basic Services are proposed as a solution to mitigate AI-induced job losses, ensuring access to healthcare, education, and housing independent of employment status.

Worker-owned cooperatives and democratically governed enterprises are suggested to ensure automation benefits are shared equitably, rather than accruing to capital alone.

[GS2-Governance] The article critiques the political consensus on markets, arguing for a democratic socialist approach to AI governance to prevent corporate dominance.

Way Forward: India should treat AI infrastructure as a public utility, expand universal basic services, and promote worker-owned enterprises to ensure equitable distribution of AI benefits.

Key terms

Licence Raj

The Licence Raj refers to the pre-1991 economic system in India where government permits were required for business activities, leading to bureaucratic inefficiency and stifled growth. Its dismantling in 1991 marked India's shift to liberalisation, crucial for understanding economic reforms in GS3.

Algorithmic Precarity

Algorithmic precarity describes the instability faced by workers in gig economies where AI-driven systems dictate employment terms without transparency or accountability. This concept is vital for GS2 labour rights and GS3 digital economy discussions.

Universal Basic Services

Universal Basic Services (UBS) propose guaranteed access to essential services like healthcare and education, independent of employment. This policy idea is relevant for GS2 governance and GS3 inclusive growth debates, especially in the context of AI-driven job displacement.

Economic Liberalisation

Economic liberalisation refers to the 1991 reforms that reduced government control over the economy, promoting private sector growth and global trade. Its impacts on inequality, employment, and growth are central to GS3 economic policy analysis.