Current Context: On 6 October 2026, the World Bank raised India’s GDP growth forecast for FY 2026-27 (FY27) to 7.1% from 6.6% in its latest India Development Update, citing stronger-than-expected growth, firm domestic demand and resilient exports.
- What changed? The World Bank upgraded India’s FY27 growth forecast by 0.5 percentage point, from 6.6% to 7.1%.
- Why was the forecast raised? The revision was driven by robust domestic demand, strong exports and continued momentum in industry and services despite trade and geopolitical uncertainties.
- Recent growth performance: India’s real GDP grew by 7.8% in FY26, up from 7.2% in FY25. Growth remained strong at 7.8% in Q1 FY27.
- Sectoral performance: In Q1 FY27, the services sector grew by 10%, while infrastructure and construction supported industrial growth. Agriculture remained relatively weaker and was identified as a near-term concern.
- Major risks: The World Bank cautioned that India’s outlook could be affected by high global crude-oil prices, El Niño-related weather disruptions and stock-market corrections that could trigger capital-flow volatility.
- AI as a growth opportunity: The report’s special focus, India and Artificial Intelligence: Seizing the Development Opportunity, said India is well placed to benefit from AI because of its large technical workforce, globally integrated IT sector and digital public infrastructure.
- AI investment: Private AI investment in India rose from about $1.2 billion in 2024 to $4.1 billion in 2025, indicating rapid expansion of the AI ecosystem.
- South Asia outlook: The World Bank also raised the growth forecast for South Asia to 6.9%, supported substantially by India’s economic performance.
Question:
Q1. According to the World Bank’s October 2026 India Development Update, India’s GDP is projected to grow at what rate in FY27?a) 6.6%
b) 6.9%
c) 7.1%
d) 7.8%
Answer: (c) The World Bank revised India’s FY27 GDP growth projection upward from 6.6% to 7.1%, mainly because of stronger domestic demand and resilient economic activity.
