Indian Economy and Financial System in the Age of AI: Pathway to a Viksit Bharat by 2047

 

Indian Economy and Financial System in the Age of AI: Pathway to a Viksit Bharat by 2047

India is one of the most dynamic countries, and the scale of the opportunity IT HAS WITH AI IS IMMENSE.

Sundar Pichai

Chief Executive Officer, Google.

1. Background and Context

India stands at a defining economic moment. With strong GDP growth, expanding infrastructure, and globally recognised digital public infrastructure such as India Stack and Unified Payments Interface, the country has built a solid macroeconomic base.

At the same time, the rapid rise of Artificial Intelligence (AI) is reshaping the global economic and financial landscape. For India—where the services sector, particularly IT, has been a major growth engine—this transformation presents both opportunity and risk.

As India aspires to achieve “Viksit Bharat” by 2047, the policy challenge is to ensure that technological transformation leads to inclusive, employment-rich, and ethically grounded development.

2. Current Assessment of the Economy and Financial System

2.1 Macroeconomic Strengths

• Sustained high growth trajectory relative to global peers
  
  

• Strong public investment in infrastructure
  
  

• Improving tax buoyancy and formalisation
  
  

• Resilient external sector
  
  

2.2 Financial System Stability

Guided by the Reserve Bank of India, India’s financial system has strengthened significantly:

• Reduction in Non-Performing Assets (NPAs)
  
  

• Improved capital adequacy of banks
  
  

• Expansion of digital finance and fintech ecosystem
  
  

• Greater financial inclusion through Jan-Dhan–Aadhaar–Mobile architecture
  
  

2.3 Structural Concerns

Despite strengths, several persistent issues remain:

• Employment generation lagging behind growth
  
  

• Income and regional inequality
  
  

• Stress pockets in NBFC and retail credit segments
  
  

• Slow judicial and regulatory resolution mechanisms
  
  

3. AI and IT Disruption: Implications for India

India’s globally competitive IT sector—represented by firms like Infosys and Tata Consultancy Services—is undergoing structural transformation due to AI-led automation.

3.1 Opportunities

• Productivity gains across sectors (health, agriculture, logistics, governance)
  
  

• Creation of new sectors (AI services, data economy, cyber security)
  
  

• Global leadership potential in digital public infrastructure and AI governance
  
  

3.2 Risks

• Displacement of mid-level IT and BPO jobs
  
  

• Wage stagnation in routine service roles
  
  

• Skill polarisation and widening inequality
  
  

• Concentration of economic power in high-technology firms
  
  

4. Key Policy Risks for the Next Two Decades

1. Jobless or Job-poor Growth
   
   

2. Skill Mismatch in the AI Economy
   
   

3. Financial Sector Exposure to Technology-led Disruption
   
   

4. Digital Divide and Unequal Access
   
   

5. Governance and Ethical Deficits in Technology Deployment
   
   

5. Strategic Policy Recommendations

5.1 Employment-Centric Economic Strategy

• Incentivise labour-intensive manufacturing and MSMEs
  
  

• Develop green economy jobs (renewable energy, climate adaptation)
  
  

• Strengthen urban employment programmes
  
  

5.2 National Human Capital and Skills Mission

• Universal foundational learning reform
  
  

• Large-scale reskilling for AI, robotics, and data systems
  
  

• Industry-academia collaboration for future-ready workforce
  
  

5.3 Financial System Deepening and Risk Management

• Strengthen supervision of NBFCs and fintech lending
  
  

• Expand long-term bond markets and pension funds
  
  

• Promote responsible AI use in credit scoring and risk analytics
  
  

5.4 AI Governance and Ethical Framework

India should emerge as a global leader in responsible AI by:

• Establishing national AI regulatory standards
  
  

• Ensuring transparency, auditability, and accountability
  
  

• Protecting data privacy and citizen rights
  
  

5.5 Institutional and Governance Reforms

• Faster judicial and contract enforcement systems
  
  

• Transparent and time-bound regulatory approvals
  
  

• Strengthened anti-corruption and accountability frameworks
  
  

6. Role of the State, Market, and Society

A Viksit Bharat requires coordinated action:

Stakeholder	Role
Government	Policy clarity, infrastructure, human capital investment
Private Sector	Innovation, employment generation, ethical AI adoption
Financial Institutions	Responsible credit expansion and risk management
Civil Society	Ensuring inclusiveness, accountability, and trust

7. Measuring Success Beyond GDP

Development must be evaluated not only by output but by  outcomes in terms of quantity and quality in the areas of

Employment

Access to healthcare and education
Financial security
Environmental sustainability
Trust in institutions for their delivery in terms of Statutory and moral Requirements.

Trust in the overall  Governance Standards in Legislative, Judiciary and Executive areas.
8. Conclusion

India has a historic opportunity to transform itself into a developed, equitable, and technologically advanced economy by 2047. However, this transition will not occur automatically through growth or technology alone.

It requires:

• Ethical governance
  
  

• Strong institutions
  
  

• Employment-oriented growth
  
  

• Human-centred technological adoption
  
  

AI can be a powerful accelerator, but only when guided by wisdom, regulation, and social responsibility.

A truly Viksit Bharat will not merely be a richer India—it will be a fairer, more humane, and more trustworthy society.

May the Artificial Intelligence along with the very prudential and providential application of Natural intelligence under the guidance of Spiritual Intelligence take the economy fast forward and provide the best of quality life keeping the  powerful and mighty nature in tact with the optimum use of  all its  energy .  

Loka samastha Sukhino Bhavanthu.

T V G Krishnan

(Personal Views) 

 

Depositors as Silent Stakeholders: Time to Restore Balance in Indian Banking

In the architecture of modern banking, one truth remains fundamental yet under-acknowledged: banks are sustained by depositors’ money. Every rupee lent, invested, or deployed by a bank originates from the trust reposed by millions of ordinary citizens. Yet, paradoxically, depositors remain the least protected and least rewarded stakeholders in the banking system.

This structural imbalance requires urgent attention if India is to build a truly resilient and equitable financial system on its path toward a “Viksit Bharat” by 2047.

The Unequal Burden on Depositors

Depositors today bear a silent but substantial burden:

• They receive interest rates that often fail to match inflation, eroding real savings. Even interest attracts Income tax is a very sad part.

• They indirectly absorb the consequences of non-performing assets, frauds, and weak credit appraisal.

• They face penalties and charges, including for not maintaining minimum balances.

• Their protection is limited to a modest insurance cover of ₹5 lakh per depositor through the Deposit Insurance and Credit Guarantee Corporation.

Despite providing the primary resource base of banks, depositors lack representation, voice, and adequate safeguards.

A Unique Sector Demands Unique Governance

Banks are not ordinary commercial enterprises. They deal with the most sensitive public resource—money—and the most dynamic asset—human trust. Equating banks with other businesses in governance philosophy is a conceptual error.

The regulatory framework led by the Reserve Bank of India has evolved considerably over time, but systemic issues persist:

• Risk is socialised, while decision-making is concentrated

• Returns to depositors are controlled, while inefficiencies in lending are tolerated though bad and recalcitrant  borrowers deserve a different treatment in depositors'  and all stakeholders of Banks' interest. 

• Transparency in charges remains uneven

In such a structure, depositors effectively subsidise inefficiency.

The Question of Charges and Penalties

The imposition of penalties for non-maintenance of minimum balances raises a fundamental ethical and economic question.

In an era of core banking, digital transactions, and negligible marginal cost of servicing accounts, such penalties—especially on small depositors—appear regressive and disproportionate. They resemble revenue extraction rather than genuine cost recovery.

Financial inclusion cannot coexist with punitive fee structures.

The Interest Rate Paradox

Savings bank deposit rates around 3–4 percent and term deposit rates in the range of 6–7.5 percent often fail to compensate for:

• Consumer inflation

• Food inflation

• Healthcare and education costs

• Increasing cost of living in urban India

Thus, depositors face financial repression in real terms, even while bearing systemic risk.

Governance Failures and Moral Hazard

Repeated cycles of large non-performing assets, frauds, and recapitalisation—particularly in public sector banks—point to deeper governance issues:

• Weak accountability in credit sanction

• Political or institutional interference

• Delayed recognition of stress

• Evergreening of loans

When losses occur, they are ultimately absorbed by taxpayers and depositors, creating moral hazard and eroding trust.

Rebalancing the System: A Policy Agenda

To restore equity and confidence in the banking system, a series of structural reforms are necessary:

1. Strengthening Depositor Protection

• Enhance deposit insurance coverage to ₹10–15 lakh

• Introduce risk-based insurance premiums linked to bank risk profiles

2. Ensuring Fair Returns

• Introduce inflation-linked deposit instruments

• Create a benchmark-linked floor rate for small depositors

3. Reforming Governance

• Professionalise bank boards with independent oversight

• Enforce accountability for large credit decisions

• Strengthen early warning and resolution systems

• Introduce  Incentive / penalty based on the rating of borrowers  and ensure that the cost of NPAs to banks are borne by banks and borrowers themselves. Heath of the banks is dependent on the health of borrowers and the health of the economy is dependent on the health of the banking and entire Financial system. 

4. Rationalising Charges

• Cap and standardise penalty charges

• Mandate zero-penalty basic banking accounts

• Ensure full transparency in all fees and commissions

5. Institutionalising Depositor Voice

• Establish Depositor Protection Councils

• Include depositor representation in policy consultations

6. Strengthening Supervision

• Real-time monitoring of large exposures

• Time-bound resolution of stressed assets

• Strict enforcement against fraud and wilful default

• Scope for AI based checks and balances to detect erratic and fraudulent entries. 

The Larger Economic Imperative

India’s aspiration to become a developed economy by 2047 rests critically on a stable, trusted, and efficient financial system.

Trust in banks is not built merely on capital adequacy or regulation—it is built on fairness to the smallest depositor.

If depositors begin to feel:

• under-rewarded,

• over-charged,

• and under-protected,

then the very foundation of financial intermediation is weakened.

Conclusion: Recognising the Silent Pillar

Depositors are not passive providers of funds. They are the silent pillars of the banking system.

A fair banking system must ensure that those who provide the foundation are:

• protected,

• respected,

• and reasonably rewarded.

Rebalancing the system in favour of depositors is not a concession—it is a necessity for long-term financial stability, ethical governance, and inclusive economic progress.

Only then can India’s banking system truly align with the ideals of equity, trust, and shared prosperity that underpin the vision of a developed nation.

T V G Krishnan

( personal Views)

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What really needs to Change to realise the Dream of Viksit Bharat.

The recent observations of the Supreme Court of India on the functioning of Real Estate Regulatory Authority are indeed significant. When the highest court openly acknowledges gaps and failures in implementation, it signals that the system is not entirely insensitive. That is where hope lies.

That corruption, influence, and misuse of legal processes distort justice. When power and money override fairness, institutions lose credibility. Yet, it is equally true that systems do not collapse overnight—they weaken slowly when citizens disengage, when officials compromise, and when accountability becomes selective.

 Ethics and Sanatan values cannot  only be confined to books.Principles mean nothing unless they are lived in public life—by  Legislators, Administrators, Judiciary, Professionals, Academicians,  Businesses, and Citizens alike. A society cannot run on laws alone; it needs character. At the same time, one cannot  underestimate the resilience of people. The fact that citizens continue to live, hope, work, and raise families despite injustice is not just a mystery—it is strength. It is also a reminder that reform is always possible because society has not given up.

What really needs to change

For the wonderful vision of  “Viksit Bharat” to become real, three things must happen together:

1. Institutional accountability
   Every authority created by law must function for the purpose it was created—not as a procedural formality. Performance must be measurable and transparent.

2. Speed and accessibility of justice
   Laws like RERA were meant to give quick relief. If implementation becomes slow or biased, the very objective is defeated.

3. Ethical leadership and civic pressure
   Reform does not come only from within institutions—it also comes from citizens who question, document, vote, and persist

4. Will authorities introspect and act? Some will. Some won’t. Change will be uneven.

But history shows that when public awareness, judicial scrutiny, and civic insistence come together, reform does happen—sometimes slower than we want, but real nonetheless. Let noble thought translate into noble action.

This  is not just a prayer—it is also a call to conscience for every institution and every citizen.

TVG Krishnan

(Personal Views)

 (  Modified version of this Comment appeared in Money Life dated 12/2/26 against the article "Better to abolish RERA,It only helps Builders.)

Being Noticed is very Important .

 

                                             Being noticed is very important.

This refers to the article “Being Unelected Is Not Unimportant” (ET, 28 January 2026). Being noticed is, in fact, crucial in all forms of democracy—whether constitutional or popular.

Constitutional democracy rests on patriotism, respect for the Constitution, and the principle of equality irrespective of gender, religion, caste, race, or social status. Popular democracy, however, often thrives on familiarity, visibility, social engagement, and the ability to connect with people—sometimes even at the cost of overlooking ethical distinctions between what is right, wrong, or outright unacceptable. This partly explains why our elected bodies increasingly include individuals with criminal backgrounds.

In this context, strong and genuinely independent institutions—such as the Judiciary, Defence and Security forces, the Monetary Authority, and the education and health systems—can make a decisive difference. Their effectiveness depends on realistic autonomy, insulation from political interference, and accountability to the people through Parliament, ideally comprising individuals with proven constitutional integrity and democratic values.

Ultimately, governance must be robust, ethical, and free from corruption driven by selfish motives, divisive ideologies, and the manipulation of social biases. Only then can national progress and welfare measures truly serve the people.

Loka Samastha Sukhino Bhavanthu can be the only objective behind all Public  Policies, and Laws of the Country..

T V Gopalakrishnan 

Bengaluru 

Corruption: The Silent enemy of Governance , Justice and Civilisation.

 Corruption: The silent enemy of Governance , Justice and Civilisation. 

A recent national television debate on whether people are truly benefiting from an economic growth rate of 7.3% for FY 2025–26 is itself revealing. While growth figures appear impressive, the continued absence of basic amenities, minimum infrastructure, and humane living conditions for large sections of the population exposes a deep disconnect between economic progress and people’s lived realities. That such fundamental issues still demand national attention reflects long-standing governance failures and lack of accountability.

Corruption remains the principal reason for this contradiction. Though universally acknowledged as a major impediment to development, corruption continues to thrive due to systemic callousness and absence of responsibility. Across legislation, administration, and execution, human suffering is often dismissed as destiny rather than recognised as the outcome of man-made systems and deliberate neglect—contrary to the ethical foundations of our civilisation.

Corruption in administration is more destructive than disease. While science can cure physical ailments, corruption has become deeply entrenched—adaptive, inherited, and normalised across social, political, and economic boundaries. It manifests in multiple forms and is increasingly accepted as an unavoidable part of life.

Ironically, many so-called anti-corruption reforms are cosmetic and short-lived. Instead of eliminating corruption, systems and procedures have evolved to accommodate and institutionalise it, making malpractice an informal prerequisite for smooth functioning. Intelligence and authority across institutions have often been used to redesign corruption rather than dismantle it.

This reality calls for urgent collective introspection. Intellectuals, policymakers, administrators, professionals, corporate leaders, educators, technocrtas, social reformers, religious heads, and above all ordinary citizens must come together to confront corruption honestly and pragmatically. True progress lies not merely in higher economic growth, but in improved quality of life rooted in integrity, justice, and compassion—the essence of Sanatan Dharma.

Truth can triumph only when corruption is consciously rejected—culturally, ethically, and emotionally. Capability and success must advance together, while need must never be replaced by greed. Though corruption may appear convenient for administration, it is a destructive and avoidable bane for society.

The time has come for collective moral courage. A society free from man-made distortions is possible—if there is willingness to act.

Truth Alone Triumphs. Corruption which acts as the Greatest Obstacle to People-Centric Progress needs to be eradicated at the earliest systematically and with all Seriousness to derive full benefits of our capabilities and economic achievements.

Loka Samastha Sukhino Bhavanthu.

TVG Krishnan

(Personal Views)