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World Bank Raises India’s FY27 Growth Forecast to 7.1%
The World Bank now expects India’s economy to grow by 7.1% in FY27.
That is higher than its earlier forecast.
It says spending in India and activity in industry and services are helping the economy.
It also expects growth to remain strong over the following two financial years.
But expensive energy, difficult weather and problems in world trade could slow growth.
The report says fewer formal businesses in India use AI than in the United States.
It says smaller businesses may need help and workers may need training to use AI.
The bank also said AI has not caused widespread job losses in India so far.
The World Bank raised its FY27 India growth forecast by 0.5 percentage point to 7.1%.
It expects growth of 7.2% in FY28 and 7.0% in FY29, with medium-term potential growth around 7%, up from 6.5%.
The bank cited resilient domestic demand and momentum in industry and services; lower inflation and stronger credit growth are expected to support consumption.
It warned that higher energy prices, a prolonged West Asia conflict, El Niño, monsoon conditions and global trade tensions could weaken the outlook.
The report said about 23% of formal Indian firms use AI, compared with 43% in the United States, and recommended support and skills training to encourage adoption.
- Who
- The World Bank.
- What
- It raised its forecast for India’s FY27 economic growth to 7.1% and outlined supporting factors and risks.
- Where
- India.
- When
- The forecast concerns FY27, the financial year ending March 2027; the World Bank announced the revision on Tuesday.
- Why
- The bank cited strong domestic demand and resilience in industry and services, while noting risks from energy prices and weather.
Risks to the outlook
Factors supporting growth
India’s growth prospects
Risks to the outlook
The World Bank warned that higher energy prices, a prolonged or escalating West Asia conflict, El Niño, uncertain monsoon conditions and global trade tensions could weigh on growth.
Factors supporting growth
The bank said strong domestic demand and continued momentum in industry and services support the outlook; ample foreign-exchange reserves and policy space provide buffers against shocks.
AI and employment
Risks to the outlook
The report said around 8% of Indian workers face AI substitution risk, concentrated in clerical and sales occupations; entry-level roles at large IT firms have been affected.
Factors supporting growth
The bank said AI has not caused broad-based job losses in India so far and could bring productivity gains. It recommended supporting adoption, especially among smaller firms, and providing training.
Key facts
- FY27 growth forecast
- 7.1%, raised by 0.5 percentage point
- RBI FY27 forecast cited in article
- 6.7%
- FY28 growth forecast
- 7.2%
- FY29 growth forecast
- 7.0%
- Medium-term potential growth
- Around 7%, compared with 6.5% previously
- Formal firms reporting AI use
- About 23% in India, compared with 43% in the United States
- Internet use by unincorporated establishments
- 39.4% in 2025, up from 26.7% a year earlier
Quotes
World Bank
Multilateral development institution that issued the India Economic Update.
“Other key risks include global trade tensions, monsoon conditions, and global growth, particularly the pace of AI-related investment. Nevertheless, strong domestic demand, ample foreign exchange reserves, and available policy space provide important buffers against external shocks.”
financialexpress.com
“The medium-term growth is expected to be broad-based, with agricultural growth accelerating as rainfall normalizes and manufacturing and services growth strengthening further as supply chains recover and external demand improves.”
financialexpress.com
Sources
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