Reserve Bank of India has said new project finance and corporate investment are likely to fall this year, despite growth buoyancy in manufacturing and services during July-September.

A RBI bulletin for December said if the aggregate capital expenditure in 2003-04 had to show growth over Rs 37,154 crore (Rs 371.54 billion) in 2002-03, the capital expenditure on projects likely to be sanctioned this year must be above Rs 17,636 crore (Rs 176.36 billion).

"Although the climate for fixed capital investment appears to be conducive and also the business confidence is positive, such a high amount of investment in 2003-04 on new projects seems to be very unlikely," RBI said.

"Thus the year 2003-04 may also witness a fall in corporate investment when compared to that in 2002-03," the banking regulator said.

RBI said due to lack of large projects in the last two years, the financial assistance sanctioned amounted to mere Rs 19,518 crore (Rs 195.18 billion).

However, RBI said this year had so far been very encouraging with a good monsoon brightening the prospects for agriculture and in turn the outlook for the industrial sector was expected to be strengthened by renewal of agriculture.

The GDP figures released on Wednesday said agriculture posted a robust 7.4 per cent growth during the second quarter of this fiscal compared to a 3.5 per cent decline in farm output during the year ago period and a meagre 1.7 per cent in the first quarter of 2003-04.

Manufacturing sector clocked a steady 6.8 per cent growth during the first half of this fiscal compared to 5.2 per cent in April-September 2002.