States can use AI for inclusive growth and governance

States are a disproportionately critical unit of governance in India's federal structure. Unfortunately, they face severe challenges due to inadequate financial resources and limited capacity to advance equitable last-mile development.

- PRASANNA KARTHIK

According to Niti Aayog's Fiscal Health Index 2025, most states are financially strained. The Reserve Bank of India (RBI) has also cautioned many of them about high deficits. This fiscal pressure, compounded by populist spending, restricts governments' ability to meet foundational development needs.

Artificial intelligence (AI) can serve as a powerful equalizer by bridging gaps in resource allocation and outcomes between states across sectors like education, agriculture, healthcare and sustainability.

The Annual Status of Education Report (ASER) 2024 reveals that less than 50% of Class 5 students in rural India can read a Class 2 text, and only 30.7% can perform basic division. These gaps stem from factors that conventionally require substantial financial resources to address.

AI-enabled solutions can be used to provide personalized learning pathways for students from disadvantaged backgrounds at minimal cost.

Globally, AI is revolutionizing education. Estonia has integrated it into its national system, while Singapore's platforms offer customized learning modules. China's AI-based tutoring systems provide real-time feedback to students and teachers. Such models demonstrate how Indian states can leverage AI to overcome legacy resource constraints and scale up quality education, reducing rural-urban disparities.