Economic Survey 2026: India should prioritise practical AI use cases over mega-models

The Economic Survey 2026, unveiled on January 29, emphasizes that India's strength in artificial intelligence (AI) is rooted in application-driven innovation. It advocates for a focus on pragmatic use cases rather than an obsession with developing large-scale 'mega-models'. The report cautions that relying on foreign AI platforms could be a perilous path for India. Instead, it encourages the nation to create homegrown AI solutions, leveraging its existing digital public infrastructure, which includes platforms like Aadhaar, UPI, and DigiLocker. The Economic Survey asserts, "India's advantages lie in application-led innovation, effective use of domestic data, and the depth of its human resources, alongside the capability of public institutions to harmonize diverse efforts." The document proposes a bottom-up approach that emphasizes open and interoperable systems, tailored models for specific sectors, and shared physical and digital resources. This strategy promises a more viable route to value creation compared to a singular focus on achieving scale. Particularly, the survey identifies sectors such as healthcare, education, and manufacturing as prime candidates for targeted AI applications, where immediate returns on investment can be realized. It also underlines the importance of implementing 'graduated regulation' to ensure that AI capabilities are safely integrated into critical areas, suggesting that regulation and data governance must adapt concurrently with technological deployment. As the Union Budget for 2026–27 approaches, there is anticipation that the government will introduce reforms and initiatives aimed at fostering an application-first approach to AI in the country.