As India enters the new year, economists say the Asian nation of over a billion people is closer than ever to attaining its goal of being a global economic power.

"When people look at the region, they tend to concentrate on China," says economist Brian Hilliard at Societe Generale investment bank in London. "Now there's another player ... that can become a major economic power."

This world attention, backed by record foreign fund inflows, is based on growth running at eight percent, a booming outsourcing sector, strong services, manufacturing expansion and consumer spending by a growing middle class.

While much of India is still steeped in poverty, there is a new "shop till you drop" mentality among the middle class, estimated at 300 million, as Asia's third-largest economy throws off statist shackles.

Buoyed by rising incomes, they are embracing consumerism with a vengeance, dropping the frugal legacy of Mahatma Gandhi, the conscience of modern India.

Go into any of the big retail outlets in New Delhi, Bombay or Bangalore that are jammed on weekends, with swanky bars or restaurants and it is clear many Indians are making up for lost time after years of penny-pinching.

"When I was a boy, people used to distribute sweets when they could afford a second-hand bicycle," recalls New Delhi builder Dipak Sharma. "Now families have two, three, sometimes four cars and don't think about it when they spend on clothes and eating out."

Increasingly, commentators speak of "two Indias" -- one of free-spending affluence and the other where 250 million people survive grim poverty on under a dollar a day.

On the business front, from telecoms to software, real estate to auto parts, virtually every sector has been firing on all cylinders and is expected to keep on doing so.

For instance in November alone, India, the world's fastest-growing mobile phone market, notched up 1.18 million new users, bringing its total to 72 million. The figures are set to rise as firms target the vast rural market.

Now economists are scaling up growth forecasts after the economy expanded by 8.1 percent in the first half and eight percent in the third quarter.

Some are pencilling in eight percent growth for the year to March 2006, up from seven percent earlier, although most project around 7.5 percent. The economy grew 6.9 percent in the previous fiscal year.

That would still make India the world's fastest growing major economy after China. What's more, the growth looks sustainable.

"Three broad themes are driving growth," says New York-based Citigroup Global Markets chief economist Lewis Alexander, pointing to investment led by spending to improve ramshackle infrastructure, urban consumption led by services and outsourcing in sectors such as financial services.

"We expect this encouraging development to continue in 2006," he says.

Many economists say India's economy now has its own momentum and it will to continue to perform strongly no matter which government is in power.