Tax Policies Key to Addressing Income Inequality Amid AI Deployment: Economic Survey

The Economic Survey 2023-24 highlights the crucial role of tax policies in mitigating income inequality, which is projected to worsen with the rise of AI technology. The report underscores the government's efforts in job creation, formalizing the informal sector, and boosting female labor participation.

Tax policies will have a major role to play in tackling income inequality in the coming years as the deployment of technology, like AI, can have a more deleterious impact on employment and income, the Economic Survey said on Monday.

It said globally, widening inequality is emerging as a crucial economic challenge confronting policymakers. The 2022 State of Inequality in India report observed that in India, the top 1 per cent accounts for 6-7 per cent of the total incomes earned, while the top 10 per cent accounts for one-third of total incomes earned.

The Economic Survey 2023-24 tabled in Parliament on Monday said the government places significant focus on this issue and all the critical policy interventions being undertaken with a focus on creating jobs, integrating the informal sector with the formal sector, and expanding the female labour force are aimed at effectively addressing inequality.

''Tax policies on the treatment of capital and labour incomes will likely play a more important role in the coming years, especially since the deployment of technology like AI may have a more deleterious impact on employment and income,'' it added.

(With inputs from agencies.)