In a release issued on Wednesday, it has attributed the lower estimate to the bleak investment outlook. Investment proposals announced are being withdrawn. Corporate results have declined for five consecutive halves, and debt servicing is on the rise. The CMIE findings do not expect the decline in investment activity to be arrested in the coming year.

The release says increase in government spending does not seem to have kick-started the economy. Both the Centre and the Indian Railways increased their spending by 25 per cent in the first half of the current fiscal, the highest rise since 1993-94.

The expected growth of agricultural production, however, has been revised upwards from 1.2 per cent to 1.5 per cent. This is attributed to a substantially improved rabi crop and a revival in the coming kharif crop.

The GDP growth forecast for 1998-99 has been, however, retained at 4.5 per cent. The current account deficit is likely to deteriorate sharply from 1.7 per cent of GDP last year to 2.6 per cent in the current fiscal, and 2.8 per cent in 1999-2000. Forex reserves have remained stable owing to unusually high capital inflows.

The centre has retained estimates for 1999-2000, when growth is expected to stagnate at 4.5 per cent. But an extraordinary crop or investment boom may increase the GDP forecast to 6 per cent in the next fiscal.

The Wholesale Price Index-based inflation is expected to decline, and end the current fiscal at 7.5 per cent. The Consumer Price Index is, however, expected to be much higher.