World Bank raises India's GDP growth forecast for 2026-27 to 7.1 per cent
The World Bank has lifted its estimate from 6.6 per cent, citing strong domestic demand, but warns of risks from weak farm output and high oil prices.
At a time of global turmoil and fast-rising inflation, there is some relief for India. The World Bank has expressed confidence in the Indian economy and raised its GDP growth forecast for the 2026-27 financial year.
According to the World Bank, the rate could be 7.1 per cent. The earlier estimate was 6.6 per cent, so the new forecast is considerably higher.
The bank's October report, "South Asia Economic Update", says it has raised its estimate by 50 basis points. The report attributes the pace to strong domestic demand and steady growth in industry and the services sector. However, weakness in agriculture remains a risk for the near future.
The monsoon is the biggest reason for the risk to farming. India is an agriculture-dependent country, and farming is a major support for its economy. But after July, the country did not receive the rain it needed, which has had a direct and significant impact on agriculture. Changes in the weather also raise the apprehension that El Nino could hit farming hard. If this situation continues for long, villages will be affected and people's spending power will fall.
The second risk is oil prices. Because of global tensions, crude oil prices are high. India imports more than 80 per cent of its crude oil, so a rise in prices can push up the import bill. If imports become costlier, petrol and diesel prices in the country will rise, making transport dearer. That will affect the prices of daily necessities, fruit, vegetables and other goods.
The report also mentions artificial intelligence (AI). The World Bank believes AI can help raise productivity and employment in South Asia, and that it could become an important tool for raising productivity in India. In an earlier survey, the World Bank found that 3.4 per cent of companies in India use AI in some form, against 42.7 per cent in the United States.
The gap widens when it comes to using more advanced levels of AI. India scores 0.27 on the World Bank's AI adoption index, against 0.85 for the United States. According to the report, the cost of adopting AI is high in India. Only 3.5 per cent of companies here have paid for AI software or subscriptions, against 23.1 per cent in the United States.
