KEY POINTS:
It's that old question once again: Is the party just getting into high gear or are the partygoers getting ready to exit.
Certainly, the festivities look like they could go on forever. But appearances can be deceptive.
Take a look at the stock market, which tumbled like a stone two months ago when India's Reserve Bank signalled it was in inflation-fighting mode and all else was secondary. The market took it on the chin and slid from a peak of 14,700 points to 12,430.
If that wasn't bad enough, a different dance was taking place in the currency markets. Here, to the alarm of exporters - and that includes the flagship software sector - the Indian rupee has risen inexorably against the US dollar. Since mid-2006, the rupee has moved up by 13.5 per cent, climbing to Rs40.85 per dollar, close to a nine-year high.
Why is the rupee shooting up when other currencies have stayed put? Most analysts place the blame once again at the Reserve Bank's doorstep.
The word is out that the bank, in its bid to contain inflation, is allowing the rupee to appreciate to make imports cheaper. Also by not selling rupees to buy dollars, it is reducing the liquidity that is fuelling inflation.
In an earlier era, the fatal combination of rising interest rates and a muscular rupee would have KO'd the economy. But powerful forces are at work these days and the gloom was blown away when Infosys and TCS, India's two biggest infotech giants, turned in sparkling quarterly results.
TCS beat the street with a 47 per cent hike in profit and Infosys outdid itself with a 74 per cent jump. Indian infotech companies, after establishing their reputation globally, are now being given the giant contracts of more than US$100 million ($136 million) that were once reserved for the IBMs and Accentures.
The TCS and Infosys results sent the stock market soaring once again and prices are nudging their old highs. Importantly, the software companies say growth isn't about to slow.
TCS, which has 89,000 people on its rolls, says it expects to hire 32,000 more next year. Announcing its quarterly results, Infosys, which has 72,241 staffers, says it's looking at adding another 24,500.
Turn from software to manufacturing - where India has traditionally been weak - and once again the champagne corks are popping. In April, Renault chief Carlos Ghosn came calling for the unveiling of the low-cost Renault Logan in India.
Ghosn, a famed cost-cutter, gave Indian manufacturers a back-handed pat, saying their cheese-paring attitudes to manufacturing came from "being used to conditions of scarcity".
From a man once nicknamed "Le cost-killer", that's a compliment.
Next, it was GM supremo Rick Wagoner who drove into town. He came to introduce GM's new small car, the Chevy Spark, and to announce that the US auto giant is stepping on the accelerator and doubling capacity at its Indian factory by next year.
Both Wagoner and Ghosn are convinced India is poised to become Asia's next growth market. In the past 18 months, a slew of auto companies have announced they'll be pouring about US$1.5 billion into the country and they aren't showing any signs of having changed their mind.
GM now says India will be its third largest production hub in Asia after Japan and China. One estimate is that Indian car output will climb from 1.3 million units to 2.5 million by 2010.
Will rising interest rates hit car sales? The evidence so far is mixed.
Sales dropped steeply in March but were back on the road in April despite worries to the contrary.
What about telecommunications? The growth story is intact there and the calls are coming swift and fast. India added 66.51 million new phone connections in 2006-07.
The soaring numbers mean India now has 206 million phone connections - an impressive number in a country that had just 5 million connections in 1990 - and even those didn't work a lot of the time.
So it's hardly surprising that the international telecom giants have turned up for the party. Nokia is re-engineering its products to reach the huge numbers at the lower end of the Indian market.
On Friday, the Finnish company announced seven new phones that will sell for between €35 ($65) and €90 - some of these models come with cameras and Bluetooth facilities.
So has the hike in interest rates had no effect? That would be a premature conclusion. There has already been a change in growth expectations.
Inflation is showing signs of coming down but at 5.77 per cent it is still nearly a percentage point above the Reserve Bank's ceiling of 5 per cent, keeping alive the possibility of more monetary tightening.
Economists have now pared back their growth estimates and are putting their bets at about 8.5 per cent instead of the 9-10 per cent some were forecasting. The Asian Development Bank is shooting even lower and expects only 8 per cent.
In the real estate sector, land prices have risen to stratospheric levels and the hike in interest rates is adding to the pain. Home loans have grown by about 30 per cent for two years running and now that's expected to drop to about 20 per cent this year - obviously still very healthy but a fall nevertheless. Developers who began spending heavily after prices had risen are already feeling the pinch.
Turn to the stock market and here the pundits have suddenly turned cautious.
Yes, they say, the market is hovering around the 14,000 level but nobody's backing it to defy gravity and rise much further this year. Nobody's putting the brakes on new investments yet - in fact, almost the contrary - but they are scanning the horizon for signs of trouble.
