Kamal Ghorui
The global economy is entering a difficult phase. Oil prices are climbing again, geopolitical tensions are reshaping supply chains, and technological disruption is redefining labour markets. If crude stabilizes near $100 per barrel, India faces a familiar macroeconomic challenge: a widening current account deficit, pressure on the rupee, and imported inflation.
At the same time, the traditional engine of India’s middle-class prosperity—its IT services sector—is facing structural disruption as artificial intelligence begins automating large segments of code writing, testing, and support services.
If these trends converge with sluggish private investment, India could face the uncomfortable possibility of stagflation: slow growth combined with rising prices.
Yet history shows that moments of structural stress often become catalysts for the most transformative policy innovations. India itself demonstrated this in 1991, when a balance-of payments crisis triggered reforms that reshaped the economy for three decades.
Today, India must again respond with bold structural action. Incrementalism will not suffice. The response must be radical, technology-driven, and productivity-oriented.
Four strategic pivots could transform this challenge into a new growth cycle.
1. Application-level AI: India’s next productivity revolution
The global conversation on artificial intelligence has largely focused on frontier models and massive computing infrastructure. But India’s real opportunity lies elsewhere: application-level AI adoption at scale.
India’s digital public infrastructure—built through platforms such as Aadhaar, Unified Payments Interface, and ONDC—has already demonstrated how software platforms can create massive productivity gains.
The next step is to embed AI agents into every layer of the economy:
- AI-enabled agriculture advisories for millions of farmers
- Autonomous supply-chain optimization for MSMEs
- AI-assisted diagnostics in public healthcare
- Intelligent tutors across India’s education system
- AI copilots in government service delivery
This is not about replacing workers—it is about augmenting human productivity. If India deploys AI agents across its economy with the same intensity with which it deployed digital payments, the country could achieve a 20–30% productivity increase across multiple sectors within a decade.
Few policy levers can match that scale of impact.
2. The great disinvestment: Unlocking trillions in public capital
India still holds enormous wealth locked inside public sector enterprises.
Companies such as Oil and Natural Gas Corporation, Coal India Limited, and Steel Authority of India Limited represent strategic national assets—but also significant capital tied up in government ownership.
Similarly, public sector banks continue to dominate India’s financial landscape, including institutions like State Bank of India and Punjab National Bank.
India’s next reform wave should consider a systematic listing and partial disinvestment of all remaining PSUs and government-owned banks.
The objective would not simply be fiscal revenue. The deeper purpose would be:
- Market discipline through public ownership
- Professionalized governance
- Global investor participation
- Efficient capital allocation
A large-scale disinvestment program could unlock hundreds of billions of dollars of capital, funding infrastructure, AI capability, and energy transition investments.
In effect, India could convert dormant public capital into future growth capital.
3. The renewable pivot: Strategic energy independence
India’s macroeconomic vulnerability has always been tied to imported energy. Every spike in crude prices widens the current account deficit and weakens macro stability. But technological progress is now changing the economics of energy.
India is already home to some of the world’s largest renewable initiatives, including the International Solar Alliance and major solar expansion led by firms like Adani Green Energy.
The next phase must accelerate three transitions simultaneously:
- Massive solar and wind deployment
- Grid-scale energy storage
- Green hydrogen ecosystems
If India can replace a significant portion of imported oil and gas with domestically produced renewable energy, the country could dramatically reduce its structural current account pressures.
Energy independence would become a macroeconomic stabilizer.
4. The mobility leap: EVs and autonomous transport
Perhaps the most transformative opportunity lies in mobility.
India has already begun electrifying transportation, supported by initiatives such as the FAME India Scheme.
But the real disruption is not just electrification—it is autonomous mobility.
Globally, companies such as Tesla and Waymo are pushing the boundaries of autonomous driving. India has a unique opportunity to leapfrog.
Imagine a national mission to build:
- Autonomous EV fleets for urban mobility
- AI-managed logistics corridors
- Electrified public transport networks
- Autonomous mining and agricultural equipment
Such a transformation would:
- Reduce oil imports
- Lower urban pollution
- Improve logistics efficiency
- Create new manufacturing ecosystems
India could become not just a consumer of EV technology—but a global production hub for electric and autonomous mobility systems.
A new reform moment
India stands at a crossroads that feels surprisingly similar to the early 1990s. But the tools available today are far more powerful.
Artificial intelligence, renewable energy, autonomous systems, and digital public infrastructure together represent a once-in-a-century technological convergence.
If deployed boldly, they can produce an extraordinary outcome: high growth with declining inflationary pressures.
The path forward therefore demands courage from policymakers:
- Scale AI across the real economy
- Unlock public capital through disinvestment
- Achieve strategic energy independence
- Leapfrog into autonomous electric mobility
Stagflation is not destiny.
With the right combination of technological ambition and policy boldness, India can transform this moment of global uncertainty into the foundation of its next economic renaissance.
And if that happens, the decade ahead may not be remembered as a period of crisis—but as the moment India chose to reinvent growth itself.
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