World Bank raises India's FY27 growth forecast to 7.1 percent

The World Bank has upgraded its economic growth forecast for India in fiscal year 2027, raising it to 7.1% from the previous estimate of 6.6%. This adjustment reflects stronger-than-anticipated growth driven by robust domestic demand and exports. Despite global economic uncertainties, India's medium-term growth prospects remain favorable, according to the latest India Development Update released on Tuesday.

The report highlights that higher global oil prices, the El Niño weather phenomenon, and potential stock market corrections could pose risks to capital flows and economic stability. However, India's economy continues to demonstrate resilience in a challenging global environment, supported by strong domestic demand and exports.

The World Bank also identifies artificial intelligence (AI) as a potential catalyst for productivity and development gains in India. Private AI investment in the country surged from $1.2 billion in 2024 to $4.1 billion in 2025, while employment in Global Capability Centres increased from 1.9 million to 2.36 million professionals over the same period. India is recognized as one of the top 10 leading emerging-market performers in AI readiness.

To fully harness AI's potential, the report calls for policy actions to deepen AI-enabling infrastructure, improve the business environment, broaden access to AI, and strengthen labor capacity. The long-term impact of AI on the economy and labor market remains uncertain, and the World Bank emphasizes the need for measures to support workers during this transition. Additionally, South Asia is projected to grow by 6.9% in 2026, maintaining its position as the world's fastest-growing region.