NEW DELHI: The Indian economy is expected to grow 7.1% in 2026-27, against 6.6% estimated earlier, on the back of strong domestic demand and exports, despite global headwinds, the World Bank said Tuesday.The multilateral agency is the latest to revise its projections after India’s growth accelerated to 7.8% during the first quarter of the current financial year, prompting upgrades from ADB, S&P, Moody’s and other global entities, which typically take a cue from official data. In 2027-28, the World Bank expects the Indian economy to grow by 7.2%.“Medium term prospects are strong, but 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,” World Bank said in a statement.It expects the “strong” momentum in industry and services to continue, with the reforms that have been undertaken – consolidation of labour codes, GST reforms, tariff rationalisation , IBC amendments, and investments in physical and digital infrastructure. In the medium-term, growth is projected to average 7.1% between 2027-28 and 2028-29, with a narrowing current deficit and declining inflation.“Strength in the rest of the economy is expected to make up for agricultural weakness,” the World Bank said, adding that the sub-par monsoons will likely reduce agricultural output and rural demand, while increasing food inflation. This will add to existing pressure from higher energy prices.Besides, the biannual update said India is well positioned to harness AI, thanks to its large technical workforce, globally integrated IT sector, and digital public infrastructure. Currently, it is ranked 10th in AI readiness, behind the US (rank 1), China (2nd) and South Korea (6th).According to a survey by the global financial institution, 23.4% of Indian firms use some form of AI, compared with 42.7% of firms in the US. The gap widens considerably when the sophistication of AI use is considered.