By Sejal Gupta
As the global labour market continues to undergo rapid transformation driven by the fourth industrial revolution, the Economic Survey 2023–24, highlights that India is not immune to these shifts. As the country embraces new technologies, artificial intelligence (AI) has emerged as a key enabler, reshaping industries, business models, and labour structures. India’s gig economy, which provides flexible, short-term employment opportunities through digital platforms, is experiencing a rapid transformation. Various studies have highlighted that integrating AI into gig platforms enhances operational efficiency, optimises delivery routes, adjusts pricing, and improves worker productivity. However, with the rapid expansion of AI in gig work, critical concerns, particularly in the realms of regulation, worker rights, and data privacy have surfaced. As AI reshapes India’s labour market, the question remains: Is the regulatory framework ready to address these changes?
Rise of AI in gig economy
The gig economy in India is booming and emerging as a critical driver of economic growth, leveraging the country’s demographics, and helping address unemployment. According to NITI Aayog’s June 2022 estimates, 7.7 million workers were engaged in gig work in 2020–21, making up 2.6 percent of the non-agricultural workforce and 1.5 percent of India’s total workforce. By 2029-30, this figure is expected to grow to 23.5 million, with 6.7 percent of the non-agricultural workforce and 4.1 percent of the total workforce. A Boston Consulting Group (BCG) report states that the sector could generate $250 billion in work volume and contribute an additional 1.25 percent to India’s GDP over time.
AI plays a pivotal role in its transformation, offering significant benefits while posing challenges that demand careful navigation. AI-driven platforms are enhancing operational efficiency by automating processes like task allocation and worker-job matching. This streamlining not only reduces downtime for gig workers but also enables businesses to deliver services more effectively. Moreover, AI-powered tools equip workers with personalized training and upskilling opportunities, helping them adapt to the dynamic gig landscape. With AI facilitating tailored work opportunities, gig workers experience greater flexibility and job satisfaction, a critical factor in a highly competitive market.
Challenges from AI integration
Despite these advancements, the challenges particularly regarding worker protection, data privacy, and algorithmic transparency of AI in the gig economy cannot be overlooked.
As per a study on the Working and Living Conditions of App-based workers in India (2024), the gig workers are governed by platform algorithms that manage task assignments, assess performance, and enforce penalties, often without any clear explanations of how it is decided. They are unaware of how rides are assigned or how their earnings and deductions are calculated. This lack of transparency means that workers are essentially in the dark about the workings of the algorithms, which are controlled by the platform companies.
Additionally, there is often no direct human oversight or communication from the platform, increasing feelings of uncertainty. This opaque system can lead to heightened stress, anxiety, discrimination, and exploitation of workers. The lack of transparency and the potential for algorithmic bias raise serious concerns regarding fairness and accountability.
Gig and platform workers often share extensive personal and professional data with platform companies, including information about their identity, location, preferences, and behaviour. These platforms collect, store, and utilize this data for purposes such as profiling, targeted advertising, and analytics. This surveillance system not only affects workers’ daily earnings but also has the potential to foster discriminatory practices, as the algorithms that monitor and evaluate their performance may be biased or opaque. However, workers typically have no control or consent over how their data is used, nor do they own or have access to it. This lack of transparency and control over personal data raises concerns about privacy violations and exploitation, impacting their income and job security. Furthermore, there have been reports of some companies deleting workers’ data at their discretion, especially when workers raise grievances, further highlighting the lack of accountability and fairness in data handling.
Current regulatory landscape
By defining “gig worker” and “platform worker” under the Code on Social Security, 2020, the government recognised the gig economy for the first time. It seeks to protect gig worker rights by giving them social security protections and covers the unorganised, fixed-term, platform and gig workers, inter-state migrant workers, etc., in addition to contract employees. The Code provides various benefits to gig and platform workers through formulation of schemes including, life and disability cover, accident insurance, health and maternity benefits, old-age protection, crèche, etc.
Additionally, one of the requirements of the Code directs platform companies to allocate 1 to 2 percent of their gross annual turnover to social security coverage of their employees, in the form of provident funds, life insurance, gratuity, etc. However, the Code fails to address uncertainty and fluctuations in income, and the issues of smart identification cards and algorithmic surveillance, with diluted penal provisions.
Despite these initiatives, India’s regulatory landscape remains underdeveloped, fragmented, and lacks complete implementation. States like Karnataka and Jharkhand have individually initiated bills on registration, welfare, and social security of platform-based gig workers by imposing obligations on aggregators and focusing on developing social security schemes and grievance redressal mechanisms.
Rajasthan is the first Indian state to enact the Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act in 2023. The Act establishes a Workers Welfare Board to register aggregators, workers, and primary employers, oversee social security schemes, and manage a welfare fund. It also provides a platform where workers can seek redress for statutory rights infringements through designated authorities.
On the other hand, in recent years, India has launched various principles and frameworks (like the INDIAai Mission) to promote the responsible development and application of AI technologies but currently, lacks a dedicated law to regulate it.
Government of Telangana initiative
In a bid to establish itself as a global hub for AI innovation, the Information Technology, Electronics and Communications Department of the Government of Telangana unveiled an AI-Powered Telangana Strategy Document & Implementation Roadmap, to drive AI-powered transformation from 2024 to 2027. A cornerstone of this initiative is the “AI for All” campaign, aimed at educating and empowering citizens aged 15–60 years to integrate AI tools into their daily lives. Inspired by Malaysia’s successful AI literacy model, the campaign seeks to make AI accessible to the general population while fostering a future-ready workforce.
As part of the initiative, the government will roll out cohort-specific AI modules tailored to the unique needs of various groups. For example, gig economy professionals will learn to optimize work schedules, enhance job searches, and manage finances using AI. These modules will be simple, multilingual, and designed for users across varying literacy levels. With this initiative, the state aims to drive inclusive digital growth and establish itself as a leader in AI innovation on the global stage.
Way forward
AI’s role in India’s gig economy is undeniably transformative, providing workers with new opportunities and driving economic growth, yet this high-profile industry is shrouded in a surprising data deficit. The study on Working and Living Conditions of App-based workers in India, states that despite the industry’s digital backbone, which meticulously captures such data, it remains exclusively held by corporations, inaccessible to policymakers, researchers, and the public.Without access to ground level information, it is nearly impossible to formulate robust and effective public policies. Transparent access to platform data can empower policymakers to craft regulations that ensure fairness and inclusivity, supporting gig workers while optimizing urban systems.
The question remains: Is India’s regulatory framework ready for the AI-powered future of the gig economy? The clock is ticking, and the need for reform has never been more urgent.
Sejal Gupta is a Senior Research Fellow at the Centre for Development Policy and Practice in Hyderabad. She has a master’s in urban planning from the School of Planning and Architecture, New Delhi. Her research areas include regulatory concerns around infrastructure, consumer, real estate sectors, and emerging technologies.
