India needs to take a proactive approach to the safety and security of artificial intelligence (AI), particularly in the financial sector, Chief Economic Adviser V Anantha Nageswaran said on Friday, warning that AI should not become a tool for exclusion and that humans must remain in the loop.
“We have to be very proactive in the safety and security aspect of AI,” Nageswaran said, stressing the need to focus on the safety and security of AI from both an Indian and global perspective.
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“Humans in the loop have to be kept always safe,” he added.
Nageswaran was speaking at a fireside chat with Gautam Aggarwal, Division President for South Asia and Country Corporate Officer, India, Mastercard, on the second day of the third ASSOCHAM FinTech Festival in New Delhi.
The CEA said AI could help financial institutions assess creditworthiness more effectively and identify risks of default and financial stress at an earlier stage. However, he cautioned against allowing AI-based systems to create new forms of financial exclusion.
“It’s important to ensure that AI doesn’t become a tool or a filter for exclusion,” he said.
AI, fintech and financial inclusion
Nageswaran described fintech as an enabling sector that helps other parts of the economy adopt technology. He said fintech companies, which typically operate with less capital than well-funded incumbents, can have a greater impact in areas such as small and medium enterprises (SMEs), self-employed borrowers and retail personal finance.
He also cautioned against setting the size of the financial or fintech sector as a standalone policy target relative to GDP.
“When we end up putting the cart before the horse, the finance cart before the real economy horse, then it doesn’t serve either the real economy or the financial sector,” Nageswaran said.
According to him, financial activity should ultimately follow the growth of the real economy rather than become an objective in itself.
Cross-border payments need trade growth
On cross-border payments, Nageswaran said sustained growth in payment flows would depend more on the expansion of trade in goods and services between countries.
“More important is to facilitate the growth of the volume of trade in goods and services than cross-border payments will happen,” he said.
He said regulatory frameworks and technology infrastructure were important prerequisites for cross-border payments, but the activity would ultimately be driven by the size of economies, trade flows and the volume of transactions between countries.
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India faces tougher next 20 years
Nageswaran also said India’s next 20 years would be significantly more challenging than the three decades since the economic reforms of 1991, as the country faces structural changes spanning climate, technology, geopolitics and the weaponisation of various capabilities.
“The next 20 years will not be the same as the previous 30 years since the reforms began in 1991. They will be much harder,” he said.
He called for both the public and private sectors to significantly step up their efforts to navigate the changing environment.
“All of us in this room and outside, private sector and public sector, have to up our game substantially for the next 20 years,” Nageswaran said.
He also highlighted the physical and mental health of India’s young population, along with education and skilling, as key priorities for the coming decades.
The CEA further pointed to state capacity — particularly the ability of governments to make decisions faster — as an important requirement for sustaining India’s economic growth.
(With inputs from ANI)
