Analysts fear a lack of capital investment and absence of sustained domestic demand may temper growth this year.

Many also believe last year's acceleration in industrial growth and exports was so pronounced because of a weak base.

The rupee is stable, stock markets are booming, inflationis is at two-decade lows and interest rates are at their lowest in a decade.

The Reserve Bank just cut several key interest rates and RBI governor Bimal Jalan feels growth prospects are better than at any time in the past decade.International rating agency Standard & Poor's upgraded its outlook on India to positive from stable in March, citing better prospects for accelerated economic reforms.

But that tends to ignore the chronic fiscal deficit which, including that of provincial governments and loss-making state-owned firms, adds up to 10 per cent of GDP.

The spotlight was on the economy once again last month when US President Bill Clinton visited with a large entourage of businessmen and the abundance of opportunities in the country was trumpeted.

India is in favour because of its place in the front ranks of the tech-media-telecom age.

But fast-growing though they may be, these industries still contribute only a small percentage to India's GDP.

And economists murmur there is not enough reason to be so gung-ho near term on the macroeconomic outlook, as the growth momentum in traditional parts of the economy remains unconvincing.

The Delhi-based National Council of Applied Economic Research (NCAER) maintains a "cautious optimism" on industrial recovery.

"The current recovery is quite patchy and will not go on for long. We'll see some petering out in the second quarter of this year," said Pradeep Srivastava, chief economist at the NCAER.

Another think-tank, the Institute of Economic Growth, forecast average growth over the next four years at 6.5 per cent -- in contrast to the government's ambitions for 7-8 per cent.

Economists said consumption is up but that this merely follows last year's multifold wage increase.

Bank credit has risen but not capital expenditure, exports have grown but not the country's export range or markets with the sole exception of software, which still only accounts for less then 1.5 per cent of GDP, they added.

While overall consumption, investment and exports grew, GDP growth in 1999/2000 (April-March) is estimated at just over six per cent, lower than the previous year's 6.8 per cent.

Retail car sales in the April-February period were up 60 per cent, and commercial vehicle sales rose over 26 per cent in the same period.

Construction activity is also up.

But analysts feel these improvements, led by the high agricultural incomes in 1998/99 and substantial wage hikes, could be short-lived.

Investment is also a cause for worry. Bank credit grew nearly 20 per cent last year and industrial growth doubled to seven per cent, but corporates are not expanding or adding capacity.

Exports and imports rose and invisible inflows were strong, keeping the current account deficit low at 1.2 per cent of GDP.

Yet non-oil imports, an indicator of investment, slackened.

The recent easing of bank lending rates may not help either since India has been relaxing rates since 1996. State-run banks formerly charged prime customers 16.5 per cent on advances in 1996. Now those rates are just over 11 per cent.

"Investment in the housing sector may pick up, but capital expenditure by corporates is not really expected to move up, which is not a healthy sign," said Rajan Govil, senior economist at HSBC Singapore.