"Two scenarios have been presented to highlight the expansionary impact of the Union budget proposals. While the GDP growth in the base case is projected to be 8.5 per cent, in the more comprehensive case, GDP growth is projected at 8.8 per cent," the report said.
In February, the government cut tax rates on manufactured products and raised the income tax exemption limits to boost the moderating economy.
"The slowdown in growth on account of adverse global factors may be offset by the expansionary fiscal policy," NCAER added.
The WPI based inflation which has touched a 42-month high is projected to be between 4.9 and 5.2 per cent during the current financial year.
NCAER expects farm output to grow by 2.5 per cent on the back of a normal monsoon during 2008-09, slightly lower than 2.6 per cent last year.
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Industrial output is expected to expand by 8.9-9.4 per cent, while services sector is likely to grow by 10.2-10.5 percent in the current fiscal year, it said.
Exports growth is expected to moderate to 16.6-17.9 per cent during 2008-09 from 23 per cent last year, while imports growth is seen at 18.2-19.5 per cent compared with 30.2 per cent of last year, it said.
NCAER expects the fiscal deficit to be higher at 2.6-3.0 per cent of GDP during the current fiscal on higher government spendings. The government is aiming at cutting the deficit to 2.5 per cent this year from 3.1 per cent in last year.