VoxDev Development Economics S7 Ep14: Ideas in Development: Raghuram Rajan on AI, India, and service-led growth
Mar 27, 2026
Raghuram Rajan, economist, University of Chicago professor and former RBI governor, discusses India’s service-led growth and how AI might reshape it. He explores which services are vulnerable or resilient, how platforms may capture value, and policy priorities like human capital, universities, and digital access. The conversation weighs risks of concentration against opportunities for adaptation and continued growth.
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Back Office Evolved Into Global Capability Centers
- Multinationals shifted from back office tasks to global capability centers that now do front and semi-front office skilled work.
- Better communications and English proficiency let Indian MBAs and engineers join global teams and capture higher-value roles.
AI Will Augment Many Service Jobs Not Instantly Replace Them
- AI will affect services unevenly and is best seen as augmentation rather than pure replacement.
- Rajan notes AI will reduce routine legal discovery but initially still needs humans to check hallucinations and craft queries.
Integrate AI Into Processes Not As One Off Software
- Firms should integrate AI into production processes, continually train models on firm data, and change workflows rather than treat AI as one-off software.
- Rajan warns many firms lack organized data and must adapt processes to realize productivity gains.