The World Bank has raised India’s GDP growth forecast for FY27 from 6.6 per cent to 7.1 per cent, up 0.5 per cent from its April projections, driven by a better-than-expected first-quarter print. “We have upgraded our FY27 growth forecast to 7.1 per cent from 6.6 per cent in April, as growth has held up better than expected despite trade and geopolitical uncertainties,” the World Bank said in its latest India Development Update.
India’s growth accelerated to 7.8 per cent in FY26 from 7.2 per cent in FY25, driven by strong investment and solid private consumption, as the favourable policy and credit environment outweighed trade tensions.
According to the report, strong domestic demand and improved exports will play a key role in driving economic growth. After this upgrade, India will maintain its strong position among the world’s fastest-growing major economies. The World Bank says that despite global challenges, India’s medium-term growth prospects remain strong. The country’s economy has shown good strength even amid external pressures.
Expensive oil and the risk of El Nino
The World Bank has also warned of some risks. The report states that a significant increase in crude oil prices, El Nino, and a potential stock market decline could impact India’s economy. These factors could lead to fluctuations in foreign investment and capital flows. Therefore, despite improved growth projections, it will be important to monitor global conditions.
Although above-average rainfall since July narrowed the monsoon deficit, the overall rainfall shortage during the southwest monsoon has weakened agricultural prospects, it said.
AI can become the new engine of growth
The World Bank has also described Artificial Intelligence (AI) as a major opportunity for India. According to the report, India ranks among the top 10 emerging markets in the world for AI preparedness. Private AI investment in India has increased rapidly. This investment increased from $1.2 billion in 2024 to USD 4.1 billion in 2025. That’s more than a threefold increase in one year. At the same time, the number of professionals working in Global Capability Centres (GCCs) also increased from 19 lakh in 2024 to 23.6 lakh in 2025.
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