India Aims to Be World's Fastest Growing Economy

Just how fast can India grow? Ask Manal Farooq, who can't make gloves quickly enough.

Pakistan's Shakeel Abbasi, background right, makes an unsuccessful attempt in the goal mouth against...

Pakistan's Shakeel Abbasi, background right, makes an unsuccessful attempt in the goal mouth against South Africa as South Africa's Shanyl Balwanth, background second right, and Keeper Erasmus Pieterse look on during the International Hockey Federation (FIH) World Cup 2010 field hockey match in New Delhi, India, Saturday, March 6, 2010. (AP Photo/Gurinder Osan)

(AP)

"We are facing a major problem," said Farooq, a senior executive at Marvel Gloves Industries, which produces 3 million pairs of gloves a month, most used in industrial production in India. "Despite importing gloves we are not able to meet demand."

The run on gloves began five months ago, said Farooq, whose customers include Ford and Nissan.

It's been driven by a record rebound in manufacturing, spurred in part by government stimulus, which has led India out of the Great Recession faster than many imagined possible.

So abundant is the optimism that India's Finance Ministry, led by Pranab Mukherjee — not a man given to hyperbole — has made a bold assertion: India could soon overtake China's growth rates.

"It is possible for India to move into double-digit growth and even become the fastest growing economy in the world within next four years," the Ministry said as part of an economic survey released in February.

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The catch: bridging the chasm between the possible and the probable.

Given the growing productivity of Indian workers and large working age population, it's certainly possible for India's economy to speed up, say economists and businesspeople.

But in practice, overtaking China would require fundamental changes in the way India does business. Creaking or nonexistent infrastructure and cumbersome government bureaucracy are drags on businesses large and small. And few think the bureaucratic and political hindrances that make it hard to execute even the best-laid plans will be removed anytime soon.

Also in doubt is how much faster growth will benefit the mass of Indians who've seen little or no gain from the country's much lauded economic rise since liberalization began in the early 1990s.

So far, the economic makeover has worsened income inequality in India, and despite five years of near nine percent growth, over 450 million people struggle by on less than $1.25 a day. A similar problem of widening inequality also blights China, which has grown an average of 9.7 percent a year over the past three decades.