World Bank raises India growth forecast to 7.1% for FY27, sees 7.2% in FY28

Speaking on the World Bank’s South Asia Economic Update (SAEU), Franziska Ohnsorge, Chief Economist for South Asia at the World Bank, said the region’s growth outlook is being shaped by both energy-market headwinds and the potential boost from artificial intelligence (AI). 2 Min Read The World Bank has forecast India’s economy to grow 7.1% in the ongoing fiscal and 7.2% in the financial year 2027-28, while projecting growth in the South Asian region at 6.7% in both 2027 and 2028. The latest FY27 forecast is higher than the World Bank’s earlier projection of 6.6%, while its FY28 growth forecast remains unchanged at 7.2%. Speaking on the World Bank’s South Asia Economic Update (SAEU), Franziska Ohnsorge, Chief Economist for South Asia at the World Bank, said the region’s growth outlook is being shaped by both energy-market headwinds and the potential boost from artificial intelligence (AI).

“The global economy currently is shaped by headwinds from high energy prices and tailwinds from AI activity,” Ohnsorge said. She said South Asia is also seeing strong remittance flows, with double-digit growth in remittances despite most migrants being in West Asia, highlighting the resilience of flows into the region. Read more: RBI likely to raise repo rate by 25 bps to 5.5%: CNBC-TV18 poll AI could support productivity and jobs Ohnsorge said AI could become an important driver of productivity and job creation in South Asia, but the region currently lags advanced economies in AI adoption.

She pointed to the high cost of AI adoption and lack of knowledge as key constraints, while noting that the biggest benefits for South Asia could come from adapting AI to local requirements. “The benefits will come from adaptation to local conditions with small AI,” she said. According to data cited by the World Bank, 43% of US firms and 23% of Indian firms are using AI, indicating scope for wider adoption in India.

Energy prices, El Niño pose risks Ohnsorge also flagged risks to the region’s growth outlook from persistent energy inflation, a severe El Niño event and disruptions to crop production. The region remains exposed to higher energy prices because of its reliance on imported energy. The World Bank had earlier noted that South Asia’s growth outlook could be affected by disruptions in global energy markets.

India’s earlier World Bank outlook had projected growth to moderate in FY27 amid higher energy prices and input costs, before recovering in FY28. The April 2026 South Asia Economic Update had also identified India as the main driver of regional growth. For the broader South Asian region, the World Bank has previously highlighted the vulnerability of economies to energy-market disruptions given their dependence on imported energy.

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Source: CNBC TV18