The decision by consulting major Capgemini to replace nearly 40% of its work done by its resource management group with IBM ’s cognitive computing system, Watson , is a clear indication that it is not just repetitive or mechanical jobs that are at risk. Artificial intelligence (AI) is capable of taking on those tasks that require analytical skills. The tasks from education and skill development just got tougher.By 2025, 70% of India’s population is projected to be of working age. A chunk of India’s present knowledge economy would have been chomped down by AI. As the knowledge economy evolves, India’s ability to continue playing a big role in that depends on swiftly raising the quality of education.It is not enough to have engineers who can write code, we need thousands of PhDs in engineering and maths and science , capable of critical thought. The education and vocational training system needs to take the real capacities of artificial intelligence into consideration in charting their course.The government is in the process of finalising a new education policy, one that will address the needs of the 21st century. This policy needs to focus on enhancing cognitive skills, capacities for critical thinking and innovation. A robust foundation will require focusing on early childhood care and education to augment cognitive skills of children.It will also require designing school curriculum and teaching practices in a manner that will encourage analytical skills and thinking. Innovation, and research and development must emerge as the cornerstone of the higher education system.Vocational educational, skill development and retraining — all need a radical transformation. The government’s massive skill development effort will need to shift its focus to augmenting the ability rather than certifying skills. The three Rs — reading, writing, arithmetic — must continue to form the core of education. The children who master them must also learn to question and criticise, to think anew and shift paradigms. They can grow up to extend AI, rather than succumb to its growing power.