The structural risk of AI-led job displacement
Devendra Agrawal, CFA
Founder
We are living through Phase 1 of an AI-driven economic shift that nobody in India is quite naming yet.
We are three years away from the centenary of the 1929 Great Depression. The world has more circuit breakers today, more powerful institutions, deeper safety nets.
But the structural risk of AI-led job displacement and weak new job creation is real, and it does not arrive as a crash. It arrives as three slow phases.
Phase 1: Disinflation.
India is growing real GDP at close to 6.9%, yet inflation is unusually stable. Historically, our inflation has run 6 to 9% over the last 30 years. The current calm is strange.
Two quiet forces may be suppressing it.
Job losses are small in absolute terms. Of 55 crore in the labour market, only around 60 lakh are in IT and ITeS. But the psychological impact on spending outlook spreads wider than the headcount.
The 1 to 1.2 crore Indians joining the workforce every year are facing a tougher placement market than four years ago. The free corporate training pipelines on the services side have thinned dramatically.
And that’s where kicks in the Phase 2: Deflation.
The Indian middle-class parent has been the silent shock absorber, supporting unemployed graduates from three decades of healthy savings.
But that cushion is finite. The day support becomes burden, household consumption cuts deeply.
We are already seeing the leading edge of this.
Domino's reported weak like-for-like growth.
Relaxo is at a seven-year low.
Jyothy Labs, parent of Ujala, is sluggish.
Even Manyavar, the wedding wear bellwether, is not growing the way it once did.
Some of this is Quick Commerce reshuffling channels. Not all of it.
And that’s where comes Phase 3: The depression risk.
Corporates face a prisoner's dilemma. Lower hiring boosts productivity, profits, share prices.
But if every B2C company optimises this way, the consumer eventually breaks. And every B2B company is ultimately selling to a B2C company.
Add China-style robotisation creeping into deliveries, last-mile and domestic work, and it is not only knowledge jobs at risk.
I am not an economist. But India has historically acted only in crisis. This is the moment the IITs, IIMs and our policy architecture should be modelling AI's real economic impact, not waiting for it to arrive.
