However, the high growth rate is "contigent on good performance by the agricultural sector which again is dependent on the monsoon," says the NCAER review which was released here on Tuesday.

"Growth is also subject to the level of capital inflows that lead directly to new investment. As real interest rates in the domestic economy continue to be high, FDI can be a catalyst for new investment, particularly if they relieve the potential pressure on infrastructure services," the review says.

It has projected overall inflation rate between 4.5 and 5 per cent during the current fiscal. Adequate stocks of foodgrain with the government provide a cushion against shortfalls in crop output in the event of below normal rainfall. Assuming a 5 per cent depreciation in the exchange rate, NCAER has forecast the trade and current account deficits at 2.5 per cent and 2 per cent, respectively.

With industry growing at 7.5 per cent in the last fiscal, NCAER has called the industrial recovery as "broad-based," though "dependence of agricultural performance on the monsoon and fragile nature of infrastructure services will continue to affect overall performance of industry during" 2000-01. The IT and communication sectors will drive the overall manufacturing services, says the review.

Foodgrain production for 1999-2000 is expected to be 201.6 million tonne against the earlier estimate of 199.1 million tonnes. However, it is "too early to predict what is likely to happen in 2000-01." The fiscal deficit of the Centre would be in line with the estimates of the 2000-01 Budget projections of 5.1 per cent, given there are no expenditure over-runs or serious shortfalls in disinvestment. "The fiscal deficit relative to real GDP will be close to 5 per cent only if the overall GDP growth remains above 6.5 per cent," says the review.

The review has forecast that the industrial growth rate during 2000-01 would be led by dynamic segments of information technology and telecom in the overall manufacturing and services in the economy. The agriculture ministry's target of 212 million tonne of foodgrains would be subject to a normal monsoon, the review says.

With the wheat procurement expected to cross 16 million tonnes, the food stocks in the state account was likely to be above 40 million tonnes against a minimum norm of 24.3 million tonnes as on July 1 compared to 30 million tonnes at the beginning of March 2000.

"Therefore, in sum, normal monsoon coupled with more than adequate level of food stocks signify comfortable supply situation for the economy during the current year," it says.

Commenting on the global economic trend, the NCAER review says that the pick up in the global ecomonies has translated into tangible benfits for India in the area of external trade.

"Both exports and imports picked up during the year gone by and the foreign exchange reserves continued to improve reaching about $38 billion by March 2000," the review says.

The world trade volume is projected to grow by 6.2 per cent in 2000 as compared to 3.4 per cent in the previous year, NCAER said adding that the IMF has projected growth of outputs for the advanced economies at 3.5 per cent for the year 2000.

The NCAER review has said the liberalisation in the procedures for accessing external commercial borrowings (ECBs) and the recovery of the domestic industry was likely to improve ECB inflows.