March 12, 1981

President Reagan's proposal to eliminate almost all Economic Development Administration financing over the next two years would cut deeply into more than 60 factory expansions, industrial parks, small-business loan funds, theater rehabilitations and other projects in depressed areas in New York, New Jersey and Connecticut. Since the freezing of applications to the E.D.A. for grants, loans and loan guarantees totaling $304 million nationwide was made known earlier in the week, corporation executives and local officials have been scrambling to get the freeze rescinded and to find alternative financing for their endangered projects. Congressional approval is needed to end the programs involved, which are authorized under existing law. But the Reagan Administration has frozen applications for the programs in anticipation of asking Congress to act.

Administration officials said today that recently acquired information indicates that the anti-Government insurgents in El Salvador are running low on ammunition because of an apparent decision by Nicaragua and Cuba to reduce their assistance. Although the officials said that the intelligence information was not conclusive, there was a growing belief within the Administration that the flow of arms to the left-wing rebels in El Salvador through Nicaragua had been drastically reduced in the last several weeks. The officials said also that there has been less activity and involvement by Cuba in helping the El Salvador rebels during the same period. U.S. Is Proceeding Cautiously The Reagan Administration has been cautious in handling the intelligence information. It does not want to undercut its own justification for increased military aid for El Salvador but it is also tempted to assert that its ''tough'' position exposing Sovietbloc assistance to the insurgents may have been decisive.

The Byrne administration today modified some bans on the outdoor use of water in the 372 communities that have been under either mandatory rationing or milder forms of water controls. However, rationing allocations and fines for excessive use were not changed. Under the changes announced today, residential, country club and municipal swimming pools may be filled and new shrubs, trees and sod may be watered for up to 90 days after being planted. The change in policy comes amid increasing concern about economic setbacks among nurseries, lawn-care concerns, sod growers and the golf course and swimming pool industries. These interests were known to be worried about possible business losses had the restrictions lasted into the spring, their busy season.

For the first time since it woke up to industrial design in the 1950's, the International Business Machines Corporation has engaged an Italian-based designer as its chief consultant. Similarly, Renault in France and Volkswagen in West Germany have called on Italian designers to develop a new look in automobiles. Sony, the Japanese electronics company, has engaged an Italian to create a prestige line of stereo equipment. The French housewares company Teraillon regularly looks across the border for Italian industrial designers.

Louise Priester used to key-punch insurance claims into a computer in the office of Blue Cross-Blue Shield of South Carolina. Now she does the same thing from a bedroom in her house in Columbia, S.C., using a terminal connected to the office's computer by telephone. Like Mrs. Priester, a small but growing number of workers are doing office work at home on small computers or terminals with typewriter keyboards. Corporations encourage the practice, to save commuting time for their employees and to recruit some workers, such as mothers of small children, who might not be able to hold conventional jobs. Working at home gives employees more flexibility in scheduling other activities. ''I can get up when I want to and work when I want to,'' said Mrs. Priester, adding that she can now take better care of her elderly mother.