WATCH: IMF's Gita Gopinath Highlights Shortcomings In Indian Economy | World Economic Forum | Davos

Without a doubt, India will become the third largest economy of the world. It's a matter of a few years unless something catastrophic happens. Just if you just look at the math in terms of India's growth rate relative to Germany and Japan, it would be very hard to see how India would not get there. And based on current projections, India gets there by 2028.

It could be even sooner than that depending upon how the revision of the GDP numbers happens at the start of this year. I guess relatively soon what happens with the rebasing. So that is not the challenge for India. The challenge for India is not about becoming the third largest economy in the world. The challenge for India is about raising per capita incomes to higher levels. And indeed, I agree with the minister that substantial reforms have been undertaken. The physical infrastructure buildout is impressive. The digital infrastructure buildout is impressive. What was done with the goods and services tax, including the simplification recently, extremely helpful. So to keep the momentum going and to keep raising per capita income and getting to the 2047 goal of Viksit Bharat, I think that's the challenge, and that will require keeping up with the steady pace of reforms to get there. But again, a lot of positive developments in India, and very important is the macro stability that you have in the country, not just with growth where it is, but also with inflation being at the low, you know, single-digit numbers. That is a good spot for India.

Yeah, I think a little bit messy is probably an understatement. [laughter] It is a tremendous challenge in India to acquire land, to have clean land titles, and that is a constraint on growth. It's a constraint on manufacturing. It's again, there are states in India that are experimenting with techniques that other states can also adopt. I think Andhra Pradesh is doing a good job in finding very creative ways of helping with selling of land, shifting land from being agriculture to commercial land. Land titling, again, pushing on that is important. Judicial reforms, I think, are absolutely critical. That is a very important bottleneck for growth in India, and it's been there. I think people have seen it as a long-standing challenge, but we're not seeing many changes on that front. In terms of the labor force, you're right. We've been talking about the demographic dividend in India for a long time. But if you look at the contribution of labor to growth in India since the 1980s, only about 30% of India's growth has come from labor. So it is a fairly capital-intensive production structure that India has because of the rules and regulations that exist and the complications of hiring labor. Now, it is a very positive step in terms of implementing the labor laws that were passed by parliament a few years ago. I think that's great. The states need to take that and go ahead. You know, raising the limit on the number of workers above which you face higher regulation from 100 to 300 is good. Though, if you want to be a part of the big global supply chain, you're going to have to be way more than 300 in terms of the size of the labor force that you have. So, pushing on that front is important. Labor market flexibility is critical. On top of that is the skilling of human capital. I think that is a very important part of the solution too. It's not just about the fact that firms aren't creating jobs. There is a mismatch between what jobs can be created and the skill of the labor force in India. So pushing on that front in terms of the level of education and human capital and skilling, super critical.