Opinion: Human Development in the age of AI
The 2025 Human Development Report serves as a clarion call: AI can reignite human development, but only if policymakers prioritise inclusivity over inequality
By Dr Amit Kumar
The Human Development Index (HDI), a composite measure of life expectancy, education and per capita income, has long been used as a measure of societal progress. Yet, the 2025 Human Development Report (A Matter of Choice: People and Possibilities in the Age of AI) reveals a troubling stagnation, with global HDI progress at its slowest in 35 years, excluding the crisis years of 2020-2021, with annual gains nearly halved compared to the 1990s.
The advancement in artificial intelligence (AI), which was supposed to aid as a tool for human development, coupled with the Covid-19 pandemic, has paradoxically deepened inequalities, particularly in developing and low- and middle-income countries like India. While AI promises transformative potential, its uneven adoption and the lingering scars of the pandemic threaten to widen the development gap, with profound implications for the future.
Covid-19 Setback
The pandemic unleashed a crisis that reversed decades of progress in human development. In low- and middle-income countries, the pandemic halted advancements in health, education and income, pushing an estimated eight out of ten people newly impoverished by 2030 into these regions.
In India, despite a rise in HDI ranking from 133rd in 2022 to 130th in 2023, inequality slashed the country’s HDI score by 30.7%, one of the highest losses in Asia. This means that if gains in health, education and standard of living were equally shared, India’s HDI would be 30.7% higher.
Lockdowns crippled economies, with India’s unorganised sector — comprising over 85% of its workforce — facing severe income disruptions due to labour migration and lack of social safety nets. Education suffered as school closures and limited internet access left millions of children, particularly in rural areas, disconnected from learning. Health systems, already strained, buckled under the weight of the crisis, exacerbating disparities in access to care.
These setbacks highlight a critical paradox: while high-HDI countries leveraged robust healthcare and digital infrastructure to mitigate the pandemic’s impact, low- and middle-income countries struggled with subpar medical facilities and inadequate testing, masking the true extent of the crisis.
In India, the economic downturn temporarily increased poverty, with education and employment status emerging as key drivers of income loss. The government’s food subsidies mitigated some effects, but the structural vulnerabilities exposed by the pandemic persist.
AI: A Promise Unfulfilled
As nations began to recover from Covid-19’s shocks, the promise of AI emerged as a new frontier — yet one that risked deepening existing divides rather than healing them. AI, often touted as a catalyst for human development, has instead become a double-edged sword. The 2025 Human Development Report underscores AI’s potential to reignite development through innovations in healthcare, education and agriculture. Yet, the benefits of AI are not evenly distributed. High installation costs, inadequate digital infrastructure, inequality in access, gender divide and a shortage of skilled workers hinder progress.
Globally, AI exposure is lower in low- and middle-income countries (26%) compared to advanced economies (60%), meaning developing nations are less likely to reap immediate productivity gains. This also means that there is more scope for leveraging AI for socio-economic progress, provided appropriate policies are put in place.
Moreover, AI’s productivity gains are largely captured by wealthy nations and tech giants, exacerbating global inequalities. This is reflected in the rising value of the difference between the High HDI value and the very low HDI value countries after 2020. As automation advances, it threatens traditional growth models reliant on cheap labour, potentially increasing unemployment and income disparities.
In India, where a youthful population demands job creation, AI’s automation of routine tasks could disrupt manufacturing and service industries, leaving low-skilled workers vulnerable. The 2025 report warns that without inclusive, human-centred AI policies, these trends will deepen social tensions and hamper HDI growth.
Navigating AI-Driven World
Looking ahead, developing countries like India face a precarious future. The rapid pace of AI adoption — exemplified by ChatGPT reaching 100 million users in just two months — underscores the urgency of closing digital and skills gaps. Yet, low- and middle-income countries lag in digital infrastructure, with inconsistent electricity and internet access limiting AI’s reach.
The skills deficit is equally daunting. AI’s ability to complement high-skilled jobs benefits advanced economies, but in low- and middle-income countries, where education systems are underfunded, retraining workers for an AI-driven economy is a monumental task.
India’s National Education Policy (NEP), 2020, aims to reform the curriculum and promote tech-enabled learning, but implementation remains uneven. Gender disparities further complicate the picture, with female labour force participation in India at just 41.7% (that too in vulnerable jobs), limiting women’s access to emerging AI-related opportunities.
Policy responses will be critical. The 2025 report advocates for investments in digital infrastructure, education and inclusive AI governance. India’s efforts, such as the National Mission on Interdisciplinary Cyber-Physical Systems, show promise, but scaling these initiatives requires international collaboration. Low- and middle-income countries must also guard against AI-driven surveillance where privacy concerns arise from mass monitoring. Ethical frameworks and transparent policies are essential to ensure AI serves human development rather than exacerbating inequities.
Call for Equitable Progress
The convergence of Covid-19’s lingering impacts and AI’s uneven rollout has placed developing countries at a crossroads. In India, the potential for AI to transform healthcare, education and agriculture is immense, but without concerted efforts to bridge infrastructure, skills and equity gaps, these benefits will remain out of reach for many.
The 2025 Human Development Report serves as a clarion call: AI can reignite human development, but only if policymakers prioritise inclusivity over inequality. For India and other low- and middle-income countries, the path forward demands bold investments, global partnerships and a commitment to ensuring that technology uplifts all, not just the privileged few. The choices made today will define whether AI becomes a bridge to progress or a barrier to human development.
(The author is Assistant Professor, Department of Economics, Christ University, Delhi NCR)
