India remains one of the fastest-growing major economies in the world and a key contributor to global growth, the World Bank’s latest economic update said.
World Bank joins list of other external agencies including Fitch Ratings, S&P Global Ratings, the Organisation for Economic Co-operation and Development (OECD) and the Asian Development Bank (ADB) which have raised India’s growth projections for the current year.
The update noted that India’s medium term prospects are strong, however it cautioned that external risks are elevated, including downside risks related to global oil prices, el Nino, and stock market corrections that would result in capital flow volatility.
The Update’s special focus, India and Artificial Intelligence: Seizing the Development Opportunity, highlights that India is well positioned to harness AI, thanks to its large technical workforce, globally integrated IT sector, and digital public infrastructure.
Private AI investment had a three-fold increase from USD 1.2 billion in 2024 to USD 4.1 billion in 2025. At the same time, Global Capability Centres employed 1.9 million professionals in 2024, which grew to 2.36 million professionals in 2025, it said.
Long-term economic and labour market impacts of AI remain uncertain. It calls for cross-cutting policy actions to deepen AI-enabling infrastructure and improve the business environment, while broadening AI access and enhancing labor capacity, so that the benefits of AI are broadly shared, the report said.
“India is one of the top 10 leading emerging-market performers on Al readiness. Harnessing Al 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. Through AgriConnect, the World Bank Group is investing in ‘small Al’: targeted, locally-adapted tools that ensure that the gains from Al are accessible and widely shared while workers are supported through the transition,” Paul Procee, World Bank Acting Country Director for India said in a statement.
The India Development Update is a companion piece to the World Bank Group’s South Asia Economic Update, which examines economic developments and prospects in the South Asia region. The latest South Asia Economic Update projects that South Asia will grow 6.9 per cent in 2026, retaining its status as the strongest-growing region.