Tamil Nadu worries AI & trade risks impacting economic growth

CHENNAI: Tamil Nadu govt considers technological disruptions such as adoption of artificial intelligence and geopolitical developments as key risks in achieving the state's goal of economic output reaching a trillion dollar by 2030.

A senior policy maker of the state said the ongoing trade war could impact goods exports, while AI can disrupt the service sector, which contributes over 53% of the state's GSDP. This along with changing employment landscape, climate change, financial market volatility and sluggish investment growth in developing economies are considered as risks to the state’s sustained economic growth in the medium term.

Speaking to the media here on Thursday, state planning commission’s executive vice-chairman Dr Jeyaranjan said technological and trade disruptions such as Russia- Ukraine conflict, US’s trade war can impact the state economy. “Tamil Nadu is the leading exporter of auto, textile, leather, non-leather footwear, electronics goods and is closely integrated with the global markets. These global disruptions could affect our economy over the next five years,” he said.

Tamil Nadu released its first economic survey on Thursday. Jeyranjan, who authored the survey, said the aim is to point out potential risks so that govt can address and take suitable policy measures in the 2025-26 budget. Referring to AI, he said there are a lot of uncertainties in gauging the economic impact and job displacements in Tamil Nadu’s service sector as the technology is rapidly evolving.

“Future challenges are unclear, but we have stressed the need for upskilling college graduates to the changing needs. There are ongoing discussions on the matter of skilling, including adapting the curriculum and introduction of bridge programs by the employers. We have shared the suggestions with the chief minister on the policy measures needed to tackle these challenges,” he said. However, the state govt is yet to assess the economic and job market implications on the artificial intelligence adoption, he said.

The survey has urged that addressing these challenges, among other things, is crucial for achieving the trillion dollar economy goal. State’s gross state domestic product (GSDP) stands at Rs 27.22 lakh crore in 2023-24. The survey said the state economy is expected to grow above 8% in 2024-25 but stopped short of providing growth estimates, which is a crucial element of economic surveys. Dr Jeyaranjan said due to the above mentioned “uncertainties” and risks, the survey did not estimate growth for 2025 and 2026 financial years. He asserted that Tamil Nadu’s borrowing is well within the (FRBM) limits.

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