World Bank raises India’s FY27 growth forecast to 7.1% from 6.6%

The World Bank has raised its forecast for India’s economic growth in FY27 to 7.1 per cent from 6.6 per cent, citing stronger-than-expected economic activity, robust domestic demand and exports.

In its latest India Development Update, released on Tuesday, the World Bank said India’s medium-term growth prospects remain strong despite global headwinds.

The World Bank, however, flagged risks from higher global oil prices, El Nino conditions and potential stock market corrections, which could contribute to volatility in capital flows.

The upward revision keeps India among the fastest-growing major economies. The World Bank said domestic demand and strong exports are expected to remain key drivers of growth.

The report also identified artificial intelligence (AI) as a potential new source of productivity and development gains for India, provided appropriate policy measures are taken to support its wider adoption.

Private investment in AI in India increased more than three-fold, from USD 1.2 billion in 2024 to USD 4.1 billion in 2025, according to the report.

Employment in Global Capability Centres (GCCs) also increased from 1.9 million professionals in 2024 to 2.36 million in 2025.

World Bank Acting Country Director for India Paul Procee said India is among the top 10 leading emerging-market performers in terms of AI readiness.

He said harnessing AI as a development tool could help India improve productivity and public services.

The World Bank said India would need policy measures to strengthen AI-enabling infrastructure, improve the business environment, broaden access to AI and build labour capacity to ensure that the benefits of the technology are more widely shared.

The report also cautioned that the long-term impact of AI on the economy and labour market remains uncertain. It called for measures to support workers during the transition while encouraging wider adoption of AI.

At the regional level, South Asia is projected to grow 6.9 per cent in 2026, retaining its position as the world’s fastest-growing region, according to the World Bank.

-ANI