The World Bank projects South Asia's economy will grow 6.9 per cent in 2026, while warning that energy shocks and weather risks could upset the outlook. A strong El Nino poses a particular risk for India, where farming drives rural demand and inflation, the bank's economists said. India last faced El Nino conditions in 2023, when monsoon rainfall was 95 per cent of the long-period average. The bank urged South Asian countries to adopt artificial intelligence to sustain growth, noting only 23 per cent of Indian firms use AI compared with 43 per cent of US firms. India's central bank expects inflation to average 5 per cent this financial year. A majority of economists polled by Reuters expect the RBI to raise its repo rate by 25 basis points on October 7, the first increase since 2023, with another hike likely in December. Broadening inflation and robust growth have strengthened the case for tightening. Prices for nearly half of India's inflation basket rose 4 per cent or more year-on-year, up from a third in March, signalling pressures spreading through the economy.