New Delhi, Jan 29 (IANS): The advent of Artificial Intelligence (AI) poses a big challenge to governments around the world due to the questions it poses to employment, particularly in services sectors, the Finance Ministry said in a review of the Indian economy issued just days before the tabling of the Interim Budget on February 1.

This was recently highlighted in an IMF paper estimating that 40 per cent of global employment is exposed to AI, with the benefits of complementarity operating beside the risks of displacement.

Further, the paper suggests that developing economies must invest in infrastructure and a digitally-skilled labour force to fully harness AI’s potential.

The reform-led growth that was witnessed by the Indian economy over the course of the last nine years is not without its accompanying share of challenges.

In an increasingly integrated global economy, India’s growth outlook is not only a function of its domestic performance but also a reflection of the spillover effects of global developments.

Increased geoeconomic fragmentation and the slowdown of hyper-globalisation are likely to result in further friend-shoring and onshoring, which are already having repercussions on global trade and, subsequently, on global growth.

The trade-off between energy security and economic growth versus energy transition is a multifaceted issue having various dimensions: geopolitical, technological, fiscal, economic and social, and the policy actions being pursued by individual countries impacting other economies.

Domestically, ensuring the availability of a talented and appropriately skilled workforce to the industry, age-appropriate learning outcomes in schools at all levels and a healthy and fit population are important policy priorities in the coming years.

A healthy, educated and skilled population augments the economically productive workforce, the Finance Ministry said.