NEW DELHI: Nobel laureate economist Joseph E. Stiglitz warned on Saturday that the global boom in artificial intelligence investment is a bubble that will break, and that India should be worried because the technology strikes directly at the coding and services jobs the country's economy runs on. He was speaking at the Hindustan Times Leadership Summit 2026 in New Delhi, the Hindustan Times reported.

Source: Hindustan Times

Stiglitz said AI is especially good at processing text and writing code, which puts programmers, coders and back-office workers first in the line of displacement. India's services sector accounts for roughly 54 per cent of the national economy and has powered its export earnings, so a sharp correction in AI spending, or rapid automation of those tasks, would carry outsized consequences for Indian jobs and growth.

He argued that AI companies are promising investors monopoly-style returns they are unlikely to keep, because falling training costs, open-source models and cheaper rivals are already eroding those margins. He pointed to the United States, where he said data centres alone accounted for between 30 and 32 per cent of recent economic growth, a concentration he described as unsustainable.

The economist also raised what Mint described as a classic demand problem: if AI removes large numbers of jobs, it is unclear who will have the income to buy what the economy produces. There is, he said, no established macroeconomic model yet for managing displacement on that scale, which raises the risk of unstable growth and widening inequality.

Source: Mint

54%Share of services in India's economy, as cited in coverage of his remarks
30-32%Share of recent US growth Stiglitz attributed to data centres
7%Growth he said India can sustain if it curbs inequality and boosts demand

Stiglitz said India can keep growing at around 7 per cent if it curbs inequality and strengthens domestic demand, and he urged heavy public investment in infrastructure and education. As a policy response, he suggested taxing the domestic winners from AI to finance education, health and the green transition, warning that a redistribution of AI gains across borders is unlikely to happen on its own.

He added that India is partly insulated for now because a large share of its workforce remains in agriculture, small services and light manufacturing, where AI adoption is slower. But that buffer, he indicated, is a reason to prepare policy early rather than a reason for complacency. His remarks were also reported by Inshorts.

Source: Inshorts