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Budget 2025 expectations: Unlocking India’s AI potential - why upskilling should be at the heart of Union Budget

Budget 2025 expectations: Unlocking India’s AI potential - why upskilling should be at the heart of Union Budget

TOI Business Experts / TIMESOFINDIA.COM / Jan 31, 2025, 20:30 IST

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Budget 2025 expectations: While a robust foundation is in place, the next wave of our AI journey hinges on the implementation of innovative and inclusive strategies, with agility. India is experiencing a demographic boom, with 64.8% of its population expected to be part of the working-age group by 2026.

Budget 2025 expectations: Unlocking India’s AI potential - why upskilling should be at the heart of Union Budget

All eyes are on the Union Budget 2025 for bold investments and strategic commitments to upskilling. (AI image)

By Neha Sharma
Budget 2025 expectations: India stands on the brink of an extraordinary AI transformation, with the potential to revolutionize industries, empower the workforce, and solidify our leadership in the technology landscape. We have several factors working to our advantage – the IndiaAI Mission committing over ₹10,000 crore into fostering a multi-pronged AI ecosystem, significant investments planned for building advanced digital infrastructure, and one of the highest reserves of technical talent. Is India truly ready to leapfrog into becoming the AI talent hub of the world?
While a robust foundation is in place, the next wave of our AI journey hinges on the implementation of innovative and inclusive strategies, with agility.
India is experiencing a demographic boom, with 64.8% of its population expected to be part of the working-age group by 2026. However, only 51.3% of college final-year students in India are employable, according to the Ministry of Skill Development and Entrepreneurship, highlighting a significant education-employability gap. Leveraging our demographic dividend requires focused efforts towards upskilling, especially in emerging areas like AI literacy, prompt engineering, AI-augmented creativity and data science.

Additionally, India’s impressive 34% of graduates in STEM fields (as per UNESCO Institute for Statistics) includes 40% women — the highest in the world. However, only 14% of these women secure STEM jobs and even fewer pursue postgraduate or doctoral studies, limiting a significant portion of India’s potential talent pool. Inclusive policies and focused efforts are critical to closing this gap and unlocking the full potential of women in shaping India’s future.
Upskilling is no longer confined to incoming graduates; it has become a top priority for corporates in the face of rapid AI adoption. From CEOs to Analysts, roles across industries will undergo seismic shifts. According to the jobs study as part of EY AIdea Report 2025, 38 million jobs in organized sector will be transformed by 2030, redefining business processes and reshaping workplaces. This will require employees to meet evolved performance standards and develop new skill sets.
Expectations from Budget 2025 to promote AI related upskilling:

Increased budget allocation to education from current ~4% of GDP to recommended 6% under the National Education Policy (NEP) 2020, will be crucial for advancing the skilling agenda. Greater emphasis on AI upskilling initiatives through flagship programs like Skill India Mission and Pradhan Mantri Kaushal Vikas Yojana, integrating AI-based topics into school and university curriculums as core subjects, will play a pivotal role in building an AI-savvy talent pipeline.

Accelerating corporate upskilling through tax incentives for companies making significant investments in large-scale AI capability-building programs, complemented by grants and subsidies for AI infrastructure development under the PPP model, is critical to ensuring India remains competitive in the global AI race. Such measures will act as a catalyst for businesses to prioritize proactive upskilling, close the widening skills gap, and future-proof their workforce.

Allocating dedicated funds for higher education institutions undertaking ground-breaking AI research and fostering industry-academia partnerships will further enable creation of new AI apprenticeships, internships and fellowship opportunities, equipping future talent with practical, real-world experience and creating a workforce ready to thrive in an AI-driven economy.

Outlaying targeted funding for AI upskilling initiatives for women, rural youth, and marginalized communities; along with continued investments in improving grassroot digital education infrastructure will ensure equitable access and inclusive growth opportunities.

All eyes are on the Union Budget 2025, with the hope that bold investments and strategic commitments to upskilling will position India as a global leader in AI innovation, paving the way for unprecedented economic growth and inclusive progress.
(Neha Sharma is Partner – People Consulting, EY India. Views expressed are personal.)

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TOI Business Experts

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