Rohit Sharma's record fifth century of the tournament powered India to a convincing seven-wicket win over Sri Lanka.
Karunaratne believes India are most balanced side of the four semi-finalists.
"I think India has a better chance to win this World Cup, for me, from my point of view," Karunaratne told reporters.
"And I think on that particular day if the other team can do better than the India team, they're definitely going to win."
Sharma (103) alongside KL Rahul (111) shared a 189-run opening stand to help India chase down 265 comfortably.
Earlier, Jasprit Bumrah starred with the ball to restrict Sri Lanka to 264 despite a hundred from Angelo Mathews.
Karunaratne credited India's cricketing structure for their strong player development.
"I think India, they have a nice structure behind the India national team. I think they have the IPL (Indian Premier League)," said Karunaratne.
"They have good domestic teams and a good season. So those are the things they will keep building, keep producing the good players. So we expect the same from our administration."
Karunaratne said his side was disappointed not to give a winning send-off to Lasith Malinga as it was veteran paceman’s final World Cup game.
"We all want to give him a nice farewell, but unfortunately we couldn't. But I think we tried really hard," said Karunaratne.
"But Mali (Malinga) going to play another couple of games in Sri Lanka against Bangladesh. We'll try to give a nice send-off at that time."