Davos, Jan 21 (PTI) Union Minister Ashwini Vaishnaw on Wednesday asserted that India will definitely become the world's third-largest economy over the next few years, with economist Gita Gopinath saying it can happen by 2028 or even earlier.

Speaking in a World Economic Forum Annual Meeting session here, Vaishnaw said the only matter of concern is what will happen with the mountains of debt in the rich world and what could be the impact on India.

Gopinath said the challenge for India is not becoming the third-largest economy; the challenge is raising per capita income to higher levels.

Vaishnaw said what is working really well is that in the last decade, there has been a transformational change in our country, and it's a very well thought-through, well-defined and a very focused execution.

He said it's built on four pillars -- the pillar of public investment in physical, digital and social infrastructure, the pillar of making sure that the entire society grows with the growth of the country, that is inclusive growth, the pillar of manufacturing and innovation, and the fourth pillar of simplification.

"All these put together with the technology platform, we have created...will make sure that India will see a real growth of 6-8 per cent with moderate 2-4 per cent inflation and nominal growth of 10-13 per cent in the next five years," he said.

"We can say that with a lot of confidence, and what's working very well is that the entire society is seeing the benefit of it.

"Also, the security of the poorest comes as a priority for our Prime Minister and the government and that has helped us bring out 250 million people from poverty," the minister said.

"What's really a matter of concern on our mind is the global debt, which is there in the rich world and how these mountains of debt will unravel and how that will impact.

"We saw in Japan a run on the bonds, and if those kinds of things happen on a large scale, it will be a matter of concern as to what would be the impact on our country," he added.

Otherwise, everything else is in a proper shape that we will become the third largest economy in the coming years, he said.

Gopinath said India will become the third-largest economy without any doubt, and it's a matter of a few years, unless something catastrophic happens.

"If you just look at the maths of India's growth rate relative to Germany and Japan, it will be very hard to say that India won't get there. Based on current projections, India gets there by 2028, and it can be even sooner than that, depending on how the revision of GDP numbers happens," she added.

Gopinath said she agrees with the minister that substantial reforms have happened, physical and digital infrastructures are impressive, and tax reforms have been great.

"So to keep the momentum going, and raising the per capita income and getting to the 2047 goal of becoming a developed nation is the challenge, and that will require a steady pace of reforms to get there," she said.

She said it is a tremendous challenge in India to acquire land and a constraint on manufacturing and growth, though some states are doing a good job by experimenting with some changes in ways to acquire land.

"Besides, judicial reforms are also very critical," she said.

Also, the contribution to growth from labour remains low due to complications relating to hiring labour, and the country's growth is very capital-intensive, she added.

The government has passed a good labour reform law, and the states need to take that forward. Labour market flexibility is very critical, and on top of that, skilling of human capital is also very important, she added.

Industrialist Sunil Bharti Mittal said India is clearly in a very good spot, and it will definitely become the third-largest economy.

What we need as the business community is an enabling environment, a committed government and stability in the country, and all of that is available now, he added while speaking in the same panel.

"One factor that is coming as a challenge to our growth is the massive competition that is out there in the world today. China had a huge market in the form of the US to grow its economy during the last few decades, and that opportunity is not available to India," he said.

"We will have to find our own ways. Thankfully, we have a huge market in India itself. We will hopefully sign a deal with the EU soon; several deals have been done, and many are in the pipeline, but the big one is the US, and hopefully that will also get done soon." We are definitely going to grow at 6-8 per cent, when the world may settle for much lower, and what can derail us is the massive competitiveness in the world, he said.

Gopinath said pollution is a challenge in India, and it is also a high cost to the economy and to human life. Addressing it on a war footing is critical, and it also has to be a key mission for India, she added.

Asked how India is insulating its growth story from the high US tariffs, Vaishnaw said India is a very resilient economy with strong macro and micro fundamentals, and that has helped the country through this turbulent period.

"Our producers are finding new markets, and our exports have actually increased despite high tariffs. We are expanding to new markets and also trying to find good and healthy trade agreements in the existing markets. In the last ten years, India has emerged as a very good value chain partner for the world," he added. PTI BJ BAL