Use of AI has specific implications for the economy: Union Finance Secretary

Union Finance Secretary T.V. Somanathan delivered the CA S. Hariharan Memorial Lecture that was organised by The Institute of Chartered Accountants of India

Union Finance Secretary T.V. Somanathan on September 22 said that artificial intelligence (AI) can replace work that is being done by accountants and auditors. Talking about the increasing influence of AI, he said, “This has a specific implication for the economy, which is, automation of business processes can be much more potent with Artificial Intelligence than it was without AI. This can potentially replace quite a bit of the work that is being done today by accountants and auditors.”

Delivering the CA S. Hariharan Memorial Lecture that was organised by The Institute of Chartered Accountants of India, here in Chennai, the Finance Secretary said, “Another economic trend that I foresee is the expansion of credit [lending] in the Indian economy.”

He explained, “In India credit to the private sector is approximately 55% of the GDP. In China it is above 180%. I would not say the Chinese level is healthy or desirable... it is not. That is not a goal we should see. However, one can argue that India’s level is too low. It has to rise to 100-120% of GDP which will accelerate investment and growth,” he added. “Projects which would otherwise not start will start if they get enough credit. But the challenge is to expand the volume of credit without bad debts and what we politely call as NPA’s. This expansion of credit will expand demand for accountants,” he pointed out.

Mr. Somanathan also highlighted that India’s population growth is now tapering off. “What is not very well know is that there are fewer children in schools than ten years ago. Certain level of population are declining. The stage is coming where some schools will have to be closed. But as India becomes richer the number of income tax payers will increase continuously for many years to come at at least the rate of GDP growth. I foresee an annual expansion of 6-7% in the number of Income tax payers and this will increase demand for good accountants,” he said.