That India’s demographic dividend is not being mined effectively cannot be denied. At present, youth unemployment in the country stands at an estimated 16.03%. Moreover, many of those entering the job market, it is feared, lack the skills to meet its requirements: the India Skills Report 2025 found that only 54.8% of graduates were fit for employment. The employment sector is already confronting strong headwinds with the rise of Artificial Intelligence that is expected to lead to significant job losses and displacement. Yet, can it argued — perhaps ambitiously — that some adjustments in policy could allow India to harness AI to make the most of its demographic dividend? India’s working-age population will increase by at least 12 million per year until 2030. The country needs to create around 8.5 to 9 million jobs every year until 2030 to utilise this surplus labour. At the same time, AI is predicted to transform 38 million jobs in India by 2030. If the existing working-age population and those who are set to enter it can be trained in how to work with AI — in data training, writing the right prompts or using deductive reasoning on content summarised by AI — India could see a 2.61% productivity gain in the organised sector and 2.82% in the unorganised sector, according to a study by Ernst & Young. Nearly two-thirds of Indians are younger than 35 and fluent in technology, giving the nation an edge. Hearteningly, the Economic Survey of 2024–25 already laid out the need for the public sector to work in tandem with the private sector to skill the youth in handling data and AI. Three Indian Institutes of Technologies hosting centres for excellence in AI is also a positive development.

But using AI to turn India’s demography into a dividend has its own challenges. There is the digital divide — National Sample Survey data have revealed clefts in terms of gender, geography and language. Worryingly, only 4.8% of men and 29.4% of women can create an electronic presentation and just 26.1% men and 19.5% women can draft documents using word-processing software, say NSS figures. Initiatives like the IndiaAI Mission, the Bhashini project — it promotes AI solutions in Indic languages — as well as public-private partnerships, such as NASSCOM’s skilling programmes, must work to address these diverse challenges. However, the foremost role in the skilling of India’s youth in AI has to be that of education. India’s education policy must be responsive to this emerging need and make necessary changes at the earliest.