World Bank Boosts India's FY27 Growth Forecast to 7.1 Percent

The World Bank has upgraded its growth forecast for India's fiscal year 2027 (FY27) to 7.1%, up from 6.6%, citing resilient domestic demand, robust exports, and stronger-than-expected industrial activity. This revision comes despite risks such as higher global oil prices, potential rainfall deficits due to El Niño, and volatile capital flows. The upgrade follows a previous increase in June, when the forecast was raised from 6.5% to 6.6%.

India's economy grew 7.8% in FY26, driven by strong investment and private consumption, and this momentum continued into FY27 with a 7.8% GDP growth in the April-June quarter. Private consumption remains the primary growth driver, though weaker rainfall could impact rural demand. Exports have exceeded expectations and are a key upside factor. On the supply side, industrial growth surged to 8.6% in the first quarter, while manufacturing and services sectors also showed strong performance.

The World Bank noted that India's strong macroeconomic buffers and proactive policy responses have mitigated the impact of the ongoing conflict in West Asia. The country has also diversified its energy sourcing, reducing its reliance on the Strait of Hormuz for crude oil imports. However, risks remain, including elevated oil prices and potential food price inflation due to lower crop production.

A significant focus of the report is the economic potential of artificial intelligence (AI). India is well-positioned to adopt AI, with a large technical workforce, a robust IT sector, and a thriving startup ecosystem. Private investment in AI increased from $1.2 billion in 2024 to $4.1 billion in 2025. While India ranks 10th in global AI readiness, its infrastructure capabilities lag behind its talent and digital adoption strengths.