New Delhi [India], October 6 (ANI): The World Bank has raised its forecast for India's economic growth in FY27 to 7.1 per cent from 6.6 per cent earlier, citing stronger-than-expected growth supported by robust domestic demand and exports, while warning that global risks remain elevated.

The World Bank, in its latest India Development Update released on Tuesday, said India's medium-term growth prospects remain strong despite global headwinds. It, however, flagged risks from higher global oil prices, El Nino and potential stock market corrections that could trigger volatility in capital flows.

The upgrade keeps India among the fastest-growing major economies and reflects the economy's resilience despite a challenging global environment. The World Bank said domestic demand and strong exports would remain key supports to growth.

The report also highlighted artificial intelligence (AI) as a potential new source of productivity and development gains for India, provided policy measures are taken to support wider adoption.

Private AI investment in India increased more than three-fold from USD 1.2 billion in 2024 to USD 4.1 billion in 2025, while employment in Global Capability Centres rose from 1.9 million professionals in 2024 to 2.36 million in 2025, according to the update.

'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,' Procee said.

The report said India would need policy action to deepen AI-enabling infrastructure, improve the business environment, broaden access to AI and strengthen labour capacity so that its benefits are more widely shared.

It also cautioned that the long-term impact of AI on the economy and labor market remains uncertain. The World Bank called for measures to support workers through the transition while encouraging wider AI adoption.

The report further said that South Asia is projected to grow 6.9 per cent in 2026, retaining its position as the world's strongest-growing region. It stressed that wider AI adoption across the region would depend on reducing barriers for small firms, supporting local innovation and establishing regulatory frameworks that provide clarity while protecting data security and privacy. (ANI)