- Survey of economists expects India's gross domestic product grew 7.5%
- Sales of passenger cars and 2-wheelers are growing at double-digit pace
- India's outlook contrasts with China where growth slipped to 6.7% in Q1
A Reuters survey of economists expected data out on Tuesday will show India's gross domestic product grew 7.5 percent year-on-year between January and March, faster than the previous quarter's 7.3 percent.
"This 7.5 percent growth, in a global slowdown environment, has a potential to pick up even more," Finance Minister Arun Jaitley said last week in general comments about the trends.
India's upbeat outlook contrasts with neighbouring China, where growth slipped to 6.7 in the first quarter - the slowest posted by the world's second largest economy in seven years.
Meantime, the Reserve Bank of India (RBI) is widely expected to keep its policy interest rate on hold at a scheduled policy review on June 7 as it waits for banks to fully pass on the previous the benefits of earlier cuts to borrowers.
Consumers, particularly in urban areas, have been encouraged by the lower rates.
Sales of passenger cars and two-wheelers are growing at a double-digit pace. Sales of new residential units recovered in the last quarter, snapping a falling trend.
Personal loans that include loans for durable goods, housing and education are growing at a rate of 19 percent year-on-year, while credit card loans are growing at a 24 percent clip.
With good rains forecast this summer, the farm sector is set to get a fillip after two successive years of drought. That bodes well for depressed rural demand.
Impending increases in wages and pensions of government employees are also expected to underpin consumer spending.
The PM swept to power promising to revitalise Asia's third-largest economy and, despite a dearth of private investment and shrinking exports, his policies are having some success as cooling inflation and lower interest rates have boosted consumer demand
Given the dim prospects for a boost from exports, Moody's Investors Service said a recovery in private investment would be needed if India's upturn was going to last.
"Combined with the fact that external demand is likely to remain lacklustre, a sustained improvement in domestic private investment would be required for the growth momentum to be sustained," the rating agency's analysts wrote in a note.
As part of his strategy to boost business and generate jobs, PM Modi has accelerated public spending on road construction, laying new power lines and upgrading the rail network.
He has also lifted caps on foreign investments in sectors such as insurance and defence manufacturing.
Still, an upturn in private capital investment remains elusive.
Festering bad loans have made banks wary of fresh lending, forcing cash-strapped firms to keep a lid on capital outlays and, in any case, many factories are still running well below capacity.
External uncertainties, meanwhile, are on the rise. Chances of U.S. interest rates going up, Britain voting to leave the European Union, and China's economy worsening all pose risks for emerging markets like India.
Get the latest election news, live updates and election schedule for Lok Sabha Elections 2019 on ndtv.com/elections. Like us on Facebook or follow us on Twitter and Instagram for updates from each of the 543 parliamentary seats for the 2019 Indian general elections.