The update said India remains one of the fastest-growing major economies in the world and a key contributor to global growth. Medium-term prospects are strong, but external risks are elevated, including downside risks linked to global oil prices, El Nino and stock market corrections that would result in capital flow volatility.
India’s economy is projected to grow 7.1 per cent in FY27, supported by domestic demand and exports, the World Bank said.
Medium-term prospects remained strong despite risks from oil prices, El Niño and market corrections.
Private AI investment rose to $4.1 billion in 2025, while the bank urged stronger infrastructure, wider access and workforce development to ensure broadly shared AI benefits.
The update’s special focus, India and Artificial Intelligence: Seizing the Development Opportunity, said the country is well positioned to harness artificial intelligence (AI) because of its large technical workforce, globally integrated information technology sector and digital public infrastructure.
Private AI investment increased three-fold from $1.2 billion in 2024 to $4.1 billion in 2025, while Global Capability Centers employed 1.9 million professionals in 2024 and grew to 2.36 million professionals in 2025.
The report acknowledged that the long-term economic and labour market impacts of AI remain uncertain. It called 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 AI benefits are broadly shared.
The India Development Update is a companion to the World Bank Group’s South Asia Economic Update, which examines economic developments and prospects in the region. The latest South Asia Economic Update projects South Asia to grow 6.9 per cent in 2026, retaining its status as the strongest-growing region, the World Bank said in a press release.
For most of South Asia, the report said the greatest gains lie in adopting AI and adapting it to local conditions, including through small AI applications suited to low-resource settings. It said progress would also depend on measures to reduce barriers to AI adoption by small firms, foster local AI innovation and establish a clear regulatory framework that reduces uncertainty, and safeguards data security and privacy.
Fibre2Fashion News Desk (SG)
