Abstract

This paper examines the economic impact of Artificial Intelligence (AI) on the unorganized (informal) sector in India, with a specific focus on road transportation, construction, and agriculture—three sectors that together contribute significantly to employment and GDP. Drawing on secondary data, policy documents, and comparative case studies from 2018-2025, the study analyses how AI-driven technologies such as autonomous vehicles, AI-enabled logistics platforms, 3D printing in construction, and smart agricultural machinery are transforming production processes and labour demand. While AI adoption improves efficiency, productivity, safety, and income prospects for capital owners and technologically equipped firms, it simultaneously threatens large-scale displacement of unskilled and semi-skilled workers who constitute the backbone of India's unorganized workforce. The paper highlights the uneven distribution of gains from AI, growing risks of unemployment, income inequality, and increased dependence on government welfare schemes, particularly among drivers, construction labourers, and landless agricultural workers. It concludes that without adequate skill upgradation, social security mechanisms, and inclusive policy interventions, rapid AI penetration may destabilize employment structures and exacerbate socio-economic vulnerabilities in both rural and urban India.