AI is proving to be more than just a digital tool; it is becoming a fiscal multiplier. By tightening compliance, improving revenue forecasts, preventing leakages, and guiding expenditure, AI is reshaping India’s fiscal landscape. Recent tax reforms under the GST regime adjusting slabs to reduce rates on essentials while taxing luxury goods higher were made possible through AI-driven fiscal analytics.
India’s rapid adoption of Artificial Intelligence (AI) is no longer confined to technology labs or industry pilots. It is becoming a core enabler of governance, particularly in its fiscal management, the backbone of any modern economy. In recent years, AI is helping India plug revenue leakages, strengthen budget forecasting, improve subsidy targeting and enhance financial inclusion. This transformation is positioning AI as a fiscal multiplier for the country’s journey toward Viksit Bharat (Developed India) 2047.
Building Fiscal AI Foundations
The launch of the IndiaAI Mission (2024), backed by ₹10,300 crore over five years, established one of the world’s largest AI compute infrastructures with nearly 18,700 GPUs. This computing backbone powers fiscal applications such as real-time GST monitoring, subsidy disbursal analytics and expenditure forecasting. Early results show that AI is improving tax compliance and reducing fraudulent claims, thereby strengthening India’s fiscal base.
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Data as the New Fiscal Fuel:
The IndiaAI Dataset Platform is emerging as a game-changer. By opening anonymized datasets to researchers and startups, the government is enabling large-scale fiscal simulations. Analysts can now model indirect tax elasticity, test subsidy impact and run “what-if” budget scenarios. This data-driven approach allows India to respond proactively to shocks such as commodity price fluctuations rather than react belatedly.
AI in Sectoral Planning and Budgeting:
AI-driven Centres of Excellence (CoEs) in agriculture, healthcare, and education are generating fiscal insights with direct policy relevance. For example, crop yield forecasts are helping calibrate procurement and subsidy budgets, while healthcare AI tools predict demand for medicines and beds, guiding public health expenditure. Such sectoral intelligence ensures more efficient allocation of scarce resources.
Financial Inclusion through Language AI:
Fiscal efficiency is not just about numbers it is also about inclusion. Platforms like Bhashini and Sarvam-1 are breaking language barriers, enabling farmers, traders and small businesses across India to access government schemes and understand tax norms in their native languages. This multilingual access improves compliance, expands the taxpayer base and increases participation in digital payments.
Strengthening Digital Public Infrastructure:
India’s Digital Public Infrastructure (DPI), Aadhaar, UPI, DigiLocker has already transformed service delivery. With AI integration, it is now tackling fiscal leakages. AI-powered fraud detection in Direct Benefit Transfers (DBTs) is reducing duplicate and ineligible claims. Recent pilots during Mahakumbh 2025 demonstrated AI-enabled DPI’s ability to manage massive financial flows in real time insights now being adapted for pension disbursal, subsidy transfers, and tax refunds.
Case Studies: AI in Fiscal Action:
The results are tangible.
GST analytics engines have identified thousands of fraudulent firms using fake invoices, saving billions in lost revenue.
DBT monitoring systems, cross-checking Aadhaar with bank accounts, are blocking duplicate or ineligible subsidy claims.
These examples highlight how AI safeguards taxpayer money and ensures greater fiscal discipline.
Human Capital and Private Innovation:
To sustain this momentum, India is investing in AI skilling and talent pipelines through the IndiaAI Future Skills initiative. Universities and AI labs in Tier 2 and 3 cities are training fiscal data analysts, while Global Capability Centers (GCCs) mainly in South India are increasingly handling compliance and financial analytics for both government and private clients.
At the same time, startups are building AI audit tools and corporates are deploying compliance monitoring systems, widening the fiscal net and reducing costs for SMEs.
Responsible and Ethical AI in Finance:
Trust is central to fiscal governance. India’s pragmatic regulatory approach neither overregulating nor leaving AI unchecked ensures safeguards against fraud and cyber risks. IITs and universities are working on AI ethics frameworks, reinforcing public trust in AI-driven fiscal systems.
2025 – AI as India’s Fiscal Multiplier
AI is proving to be more than just a digital tool; it is becoming a fiscal multiplier. By tightening compliance, improving revenue forecasts, preventing leakages, and guiding expenditure, AI is reshaping India’s fiscal landscape. Recent tax reforms under the GST regime adjusting slabs to reduce rates on essentials while taxing luxury goods higher were made possible through AI-driven fiscal analytics.
As India advances towards Viksit Bharat 2047, the integration of AI in fiscal management is emerging as both a necessity and a strategic advantage. By embedding AI into public finance, India is building a governance model that is predictive, precise, transparent, and inclusive qualities that every modern economy must aspire to.
References
1. Press Information Bureau (PIB), Ministry of Electronics & IT. India’s AI Revolution: A Roadmap to Viksit Bharat. March 2025.
2. NASSCOM & BCG. State of India’s Generative AI Ecosystem Report 2024.
3. Stanford University. AI Index Report 2024.
4. Ministry of Finance, Government of India. Union Budget 2025–26: AI in Public Finance and Governance.
5. Reserve Bank of India. AI and Machine Learning in Indian Financial Systems: Opportunities and Risks. 2024.
(The author holds a dual masters degree from Europe and the US and is an ex-international corporate banker currently serving as Visiting Professor in international marketing at a university in Bengaluru, India. Views expressed are personal. He can be reached at rameshkumarn180@gmail.com )
(This article appeared in South Asia Monitor October 10, 2025. Used under special arrangement with SAM)