India to grow at 7.1% in FY27, says World Bank report

Robust domestic demand and strong exports will help Indian economy grow at 7.1% in FY27, projects the World Bank’s latest economic update. Despite global headwinds, the country remains one of the fastest-growing major economies in the world and a key contributor to global growth, it says.

The India Development Update released today notes that medium term prospects for the country’s economic growth are strong but also cautions that external risks are elevated, including downside risks related to global oil prices, El Nino, and stock market corrections that would result in capital flow volatility.

The update’s special focus, India and Artificial Intelligence: Seizing the Development Opportunity, highlights that India is well positioned to harness AI, due to its large technical workforce, globally integrated IT sector, and digital public infrastructure.

Private AI investment had a threefold increase from $1.2 billion in 2024 to $4.1 billion in 2025, it notes. The update also highlights that Global Capability Centres employed 1.9 million professionals in 2024, which grew to 2.36 million professionals in 2025.

The report acknowledges that the long-term economic and labour market impacts of AI remain uncertain. It calls for cross-cutting policy actions to deepen AI-enabling infrastructure and improve the business environment, while broadening AI access and enhancing labour capacity, so that the benefits of AI are broadly shared.

"India is one of the top 10 leading emerging-market performers on AI readiness," said Paul Procee, World Bank Acting Country Director for India. “Harnessing AI as a development tool — not just a technology — could be one of the most powerful levers India has to boost productivity and improve public services. Through AgriConnect, the World Bank Group is investing in ‘small AI’: targeted, locally-adapted tools that ensure that the gains from AI are accessible and widely shared while workers are supported through the transition."

The India Development Update is a companion piece to the World Bank Group’s South Asia Economic Update, which examines economic developments and prospects in the South Asia region. The latest South Asia Economic Update projects that South Asia will grow 6.9% in 2026, retaining its status as the strongest-growing region.