This is higher than 5.4 per cent witnessed in 1998-99, NCAER said in macro track adding that good agricultural production growth of five per cent during 1998-99 is expected to boost demand in the economy.

The council, however, said that GDP could grow at six per cent if in addition to the good agricultural performance projected, the sops to the housing sector proposed in the Union budget 1999-2000 were implemented.

"In the face of higher demand from agriculture and housing, industry is projected to grow at 5.3 per cent while GDP growth could be pushed up to six per cent," it added.

According to NCAER, some leading indicators show signs of an upturn in the industrial performance. There has been an increase in the demand for cash by public along with greater demandfor commercial vehicles and an acceleration in their production.

Business confidence also improved but may now be affected by the political uncertainty, NCAER said. According to NCAER, the services sector is expected to remain buoyant. Growth rate in the services sector in real terms is likely to go up to 7.7 per cent in 1999-2000 as against 7.1 per cent last year.

The agricultural growth is expected to be 4.1 per cent and considering the high base of 1998-99 this would be a good performance, it said. The inflation rate is likely to remain within eight per cent assuming the money supply growth is contained within the targeted levels of 15-16 per cent.

On the fiscal deficit front, as per the definition used by the government in the Union budget 1999-2000 which excludes small savings and the new base year 1993-94, there appears to be a sharp improvement from 6.5 per cent last year to 4.2 per cent this year.

The improvement is, thus due to the change in the definition and GDP base year rather thanprudence on the part of the government. However, according to council's calculation the fiscal deficit would be 5.9 per cent using the old definition and old base year (1998-81), thus showing a marginal improvement owing to higher receipts on account of the addition to tax revenue as a result of the new proposals.

During the period 1992-98 the net inflow on account of invisibles grew by about 20 per cent per annum, mainly on account of remittances and booming software exports.

If imports of goods continue to grow at seven per cent due to the higher GDP growth and growth in ``invisibles'' (like software) continues to be robust, the rise in trade deficit from 2.2 per cent in 1998-99 to 2.7 per cent in 1999-2000 will be partly offset by invisibles, containing the current account deficit to 2.2 per cent of the GDP. However, the NCAER has not forecast any major recovery in exports as they will continue to face stiff competition from a recovering East Asia.

The council said that for Indian exports to remaincompetitive the rupee must depreciate as East Asian currencies have witnessed considerable depreciation.