To bulls, there is no stopping India from notching an even higher ranking. Shilan Shah of Capital Economics believes the country can become the world’s third-largest economy within the next decade. He does warn, however, that emergence of generative artificial intelligence could well hamper India’s rise by reducing western demand for its business process outsourcing (BPO) sector. “The emergence of AI could knock about 0.3% points off annual productivity growth over the next 10 or so years,” wrote Shah, the firm’s deputy chief emerging markets economist. But that needn’t lead to the “complete disappearance” of India’s BPO sector. “And neither will it preclude relatively strong rates of economic growth over the coming years. After all, India will still benefit from a positive demographic outlook, as well as productivity gains from friend-shoring as the global economy continues to fragment.”
