Boom time: The telecom industry has dialled up amazing numbers and auto sales are also up. (Below) Cars are lined up at the Maruti factory on the outskirts of Delhi

Is the Indian economy heading for a high speed crash? Will it skid on an oil slick as high petroleum prices send it careening off the road? Or is it moving so fast that nothing can bring it to a stop? Will it keep moving ahead, bringing more jobs and better increments for all of us?

First, the bad news. Just a few months ago, experts were fretting about oil at $100 a barrel. Now that’s way behind us — oil has catapulted to even higher levels, closing the week at $132 a barrel after touching on Thursday an all-time record $135 (that’s up over $100 in five years).

And worse may loom in the months ahead. Arjun Murti, a Goldman Sachs analyst in New York, reckons a ‘superspike’ is unfolding that’ll take oil to $200 a barrel.

Higher oil prices have also helped to send inflation zooming to a three-and-a-half year high of 7.82 per cent and it’s set to go higher. The rupee, meanwhile, has taken a nosedive against the dollar.

But don’t shed your tears just yet. India’s economy has been on a rip-roaring run for the last four years and its sheer momentum is still carrying it forward. “Growth is moderating but it’s not falling off a cliff,” says Tushar Poddar, vice-president, Asia Economic Research, Goldman Sachs.

One person who’s still super bullish about the future is ICICI Bank chairman K.V. Kamath, who argues that the huge amount of investments being made will keep the Indian economy moving forward at a brisk speed.

He calculates that investments worth a massive $700 billion are currently taking place in India. “Corporate India is growing at a pace not seen in the country’s history,” Kamath said soon after taking over as Confederation of Indian Industry (CII) president. Kamath’s figures are supported by the Mumbai-based data tracking agency, Centre for Monitoring Indian Investment, which reckons that investments have risen by over 50 per cent in the last year alone.

The bullish mood is supported by other economists. Though interest rates are at their highest in six years, companies are still borrowing. “There doesn’t seem to be a problem with corporate demand for credit. There’s a slight slowdown but it’s not very significant,” says Abheek Barua, chief economist at HDFC Bank. Adds Dharma K. Joshi, chief economist at credit rating agency Crisil: “These things (like high oil prices and inflation) are a fly in the whole growth story but won’t drag it down too much.”

So from where does such optimism spring? Well, take a look at the telecom industry which has dialled up the most amazing numbers. In March Indians bought 10 million new phone connections — in three months our phone companies will sell more phones than there are people in Australia and New Zealand. India now has 260 million phones which puts it ahead of the United States.

Put down your phone and steer onto the highway. The auto industry has been buffeted from all sides. Higher interest rates have pushed up the cost of owning a two-wheeler or an automobile. From another direction, steel prices have forced price hikes. But oddly enough it’s the less expensive two-wheelers that have seen their sales fall sharpest. Trucks sales too have stalled owing to high rates.

But don’t think it’s all gloom and doom in the vehicles industry. The car firms have been having a pretty good time: at Maruti sales are up 10-12 per cent and there’s a five-month waiting list for its new Swift Dzire. Similarly, sales at Hyundai have spiked sharply ever since the company introduced its new i10 small car.

Overall auto sales are seen rising some 12 per cent this fiscal year — down from 22 per cent last year but still very healthy. “There are some signs of a slowdown but nothing very dramatic,” says R.C. Bhargava, chairman, Maruti Suzuki.

Most auto industry manufacturers are still keeping their foot on the expansion accelerator. Take the two Japanese giants Toyota and Nissan. Toyota’s building its second factory just outside Mysore in south India and its first vehicles will race off the assembly line by 2010.

Similarly, autos will also be steered out of Nissan’s new plant in Chennai, south India — in partnership with Renault — by 2010. Both Toyota and Nissan are bringing a convoy of Japanese auto components companies in their wake. “There’ll be another big wave of investments with these companies,” forecasts Kazumasa Kuboki, director-general, Jetro (Japan External Trade Organisation) in Bangalore.

The Indian auto giants too aren’t stamping on the brakes. The Tatas opened one plant last year and will open two more in 2008. Hero Honda too opened a new factory on schedule even though bike sales have slowed. It’s reckoned that a massive $10 billion is being invested by the auto manufacturers. “Everyone’s expansion plans are going ahead,” says Dilip Chenoy, director general of the Society of Indian Automobile Manufacturers.

“There are short-term concerns but in the long term we’re comfortable with the scenario and believe investments need to be made,” says a Tata Motors spokesman.

Turn to the Indian bazaar. Retailers insist growth isn’t slowing at all — people are still shopping furiously. “We don’t see any slowdown in buying in any of our stores,” says Kishore Biyani, chairman, Future Group, which owns chains like Big Bazaar and Pantaloons.

The big chains too are moving forward rapidly. At one level, the multi-crore Aditya Birla group has just opened its first hypermarket and smaller chains like the Chennai-headquartered Subhiksha are also pushing ahead with expansion plans. Biyani says he too is moving ahead with ambitious growth plans and opening new stores. “Our expansion plans are on track,” says the man who is known as India’s “Retail King”.

And spending on infrastructure is going full speed ahead. So Indians will still get the new roads, airports and ports that are desperately needed — Bangalore’s new airport has just opened. In fact, new infrastructure is being built at a faster pace than before.

“There has been a lot of activity in the last 24 months and there’s a sharp increase in investments,” says Rajiv Lall, managing director and CEO, Infrastructure Development & Finance Corporation. Adds Poddar of Goldman Sachs: “The demand for infrastructure is going to continue to spur growth.”

Infrastructure’s particularly important because it can help offset the impact of slowing sectors. “The infrastructure sector is less cyclical in nature. It could theoretically take up some of the slack if the economy slows down,” says Lall.

Take to the skies and there’s still some gravity-defying optimism in the aviation industry where even the high flyers have plenty of reason for gloom. There are four new airlines poised for takeoff and the existing airlines have been bringing in new aeroplanes.

A year ago passenger numbers were rising by 30 per cent annually but that has fallen now to 10-12 per cent — which still by international standards would be seen as enviable.

The new aviators are bleeding mainly owing to rising fuel prices which have pushed up costs by a steep 10 to 15 per cent. “There’s no way you can make money in this scenario,” says Kapil Kaul, CEO, India and Middle East, Centre for Asia-Pacific Aviation, an aviation industry consultancy firm.

So why are four new airlines lining up on the tarmac? It seems a lot of people are betting India’s economy is headed up, up, up and they're sure any slowdown will be short-lived. They want to be poised to grab the market when it takes off again.

So are the optimists right? While some economists predict just 7 per cent growth this year, others like Mumbai’s Centre for Monitoring the Indian Economy estimate that gross domestic product will grow by a whopping 9.5 percent. Is India’s economy poised for two decades of growth — like the Chinese — that will make us all the more prosperous?

Or should we tighten our belts and prepare for another, grimmer scenario where petrol will cost at least Rs 60 a litre and possibly more?

Consider that the state-run oil companies spent about $19 billion to subsidise fuel consumption last year and are now at the end of their tether. They are talking about rationing petrol and cutting back on deliveries of cooking gas.

Also, India imports some 70 per cent of its oil and the heavy bill as oil prices kept rising has forced the rupee down sharply against the dollar.

Also don’t forget that India is entering an election year and politicians will do almost anything to wrestle down soaring inflation. That means they might tighten monetary policy dramatically to tame prices — Manmohan Singh did that in 1995 before an election and tipped the country into an economic slowdown that lasted several years. But in 2008, the economy is moving in double-quick time and the pundits are betting that the chances of a crash are dim at best.

Still partying

Investments worth a massive $700 billion are currently taking place in India

Corporate demand for credit is still up

Auto industry sales are seen rising by some 12 per cent this financial year

People are still shopping furiously, retail chain owners say

In March Indians bought 10 million new phone connections

Party poopers

Oil prices are at $132 a barrel. Some predict even $200 a barrel this year. High oil prices have led to slower growth