New Delhi, Oct. 9 -- US government agencies could face a sharp rise in artificial intelligence (AI) spending as subsidised access to AI tools expires and usage expands, with McKinsey warning that falling technology costs are not translating into lower overall bills, as per its latest report.

The report said agencies must start treating AI spending as a separate budget category and link costs to measurable outcomes to avoid unexpected bills and disruption to ongoing programmes.

"The price to run a fixed level of AI capability has fallen roughly tenfold per year and about 1,000-fold over three years. It's one of the steepest cost declines of any technology in modern history. Yet enterprise AI bills are climbing because usage is exploding ...