AI a double edge sword, capable of even influencing electoral outcomes: FM Sitharaman

Finance Minister Nirmala Sitharaman on Friday termed artificial intelligence (AI) a double-edged sword, flagging the risks posed by emerging technologies such as agentic AI, tokenisation and quantum computing. AI also has the potential to influence electoral outcomes in some cases, she said.

“The model that I'm referring to, I'm not naming it, is fully capable of influencing the opinion on the ground without people even sensing that they are being influenced. To the extent that me, being a minister, being in politics, I'm clearly seeing it capable of influencing elections,” Sitharaman said at the Global Fintech Fest here.

Her comments came in the wake of reports that a researcher who had worked at both Anthropic and OpenAI had raised concerns about major AI companies focusing more on competing with rivals than developing the technology responsibly.

“He stated publicly that commercial frontier labs are racing, and I'm quoting him, racing straight to self-improving super-intelligence and gambling with our lives,” she said. Despite benefits such as greater speed and efficiency, AI also poses significant risks.

“Speed works both ways. When decisions and transactions become instantaneous, software errors, fraud, and market shocks can spread at the same rapid pace, naturally. AI acts as a double-edged sword: it helps us spot fraud faster, but it also allows attackers to automate larger, more sophisticated cyberattacks,” Sitharaman said.

“Furthermore, the rise of quantum computing means our traditional security and encryption systems must be upgraded before current defences become obsolete,” she added. Sitharaman called for a lighter regulatory approach for the fintech sector to address emerging risks without stifling innovation.

She welcomed the Reserve Bank of India’s move to recognise the Unified Fintech Forum as a self-regulatory organisation for the industry. “I’m therefore glad that just yesterday, September 10, the Reserve Bank of India recognised the Unified Fintech Forum as another self-regulatory organisation for the fintech sector under the SRO-FT framework,” she said.

The SRO-FT refers to the Framework for Recognising Self-Regulatory Organisation(s) for the fintech sector. Sitharaman said the challenge for policymakers in the wake of emerging technologies was to “build systems that are fast yet accountable, autonomous yet reversible when mistakes occur, and innovative without diluting consumer trust.” “AI may assist judgment, but responsibility must remain human and institutional.

The more serious the consequence of a decision, the stronger the requirement for review, explanation and appeal,” she said. While allowing some room for innovation, Sitharaman stressed that regulators must remain aware of their respective responsibilities.

No activity should escape appropriate oversight simply because “it sits at the boundary between sectors or is delivered through a technology platform rather than a conventional financial institution.” Sitharaman also lauded the role of India’s younger population in adopting emerging technologies and driving innovation.

“This generation is not waiting for legacy yardsticks to validate their productivity. They are already writing tomorrow’s code, building enduring enterprises, and proving that India’s greatest demographic advantage is an active, unstoppable reality,” she said.

She added that the country is “experiencing its demographic dividend in real time” and has made significant progress towards building the world’s most powerful digital public infrastructure. Sitharaman also welcomed the tokenisation pilot launched by the Securities and Exchange Board of India (SEBI) on Thursday and urged the regulator to take the initiative further.

“In this entire framework, the monetary settlement was possible due to the presence of the Central Bank Digital Currency (CBDC). It also shows the synergy between the two regulators, RBI and SEBI,” she said. “I urge the Reserve Bank of India to further advance and also develop what it has initiated through both the wholesale and retail CBDC pilots.

Sensing the momentum in this bond and across global markets, the Reserve Bank of India needs to continue to sharpen its capabilities with the digital rupee,” she added.