July 12, 1986

The Reagan Administration has given the Central Intelligence Agency day-to-day responsibility for managing rebels' military operations against the Nicaraguan Government, Administration officials said today. Increased fighting is expected once Congress completes approval of $100 million in funds for the Nicaraguan insurgent forces, often called contras. The officials said the State Department would have overall policy direction of the operations. They said William J. Casey, the Director of Central Intelligence, had promised Secretary of State George P. Shultz that any actions that might prove embarrassing if exposed would be cleared with the State Department.

Ten years after courting bankruptcy, the City University of New York is embarking on an ambitious financial plan to expand and rehabilitate many of its inadequate and rundown campuses, university officials said yesterday. The program, outlined to institutional investors yesterday, has evolved over 20 years but was slowed and sometimes stalled because of the city's fiscal crisis in the mid-1970's and subsequent financial problems. But last week, the State Legislature authorized the university to market $1.3 billion in bonds over the next five years for projects at 13 schools. Because of legislative wrangling, the university has been unable to sell bonds for the past year and a half. Now, university officials said, the legislation will enable them to complete the entire expansion and rehabilitation program, perhaps by 1992.

With oil prices tumbling in the first half of the year, an important measure of inflation fell at the steepest rate since 1949, the Labor Department reported today. The collapse in oil prices was the ''overwhelming'' reason for the six-month drop, the department said in tabulating the Producer Price Index for Finished Goods, a gauge of goods before they reach consumers. The index fell at an annual rate of 6 1/2 percent in the first six months of 1986, the biggest half-year decline since the year before the Korean War. Over the last 12 months, the drop was 1.7 percent.

A classified Defense Department assessment of the invasion of Grenada by American forces in 1983 found that the mission was fraught with confusion brought on mainly by hasty planning, newly published documents show. An almost total lack of intelligence data about the situation on the island, brought on when a Central Intelligence Agency operative refused to fly there as a crisis enveloped the island's radical Government, was followed by critical failures of military communications and faulty tactics, the assessment concluded. While the operation has been criticized for poor coordination, and has been cited to support arguments for legislation that will soon reorganize the Joint Chiefs of Staff, newly published details from the Pentagon's assessment go well beyond what was known previously. Lack of Communications As portrayed in the report, the mission's flaws included mistaken information about the strength of the island's defenses, a decision to land Army rangers in daylight hours and, above all, a nearly crippling lack of communications between the Army, Navy, Air Force and Marine units that took part in the invasion.

The Reagan Administration continued to press the Chilean Government today for what it called an honest investigation into the death of a young Washington resident who was reportedly set on fire by Chilean soldiers. The call came as a high-ranking State Department official prepared to fly to Chile on Saturday. State Department officials said the trip, by Robert S. Gelbard, Deputy Assistant Secretary of State for Inter-American Affairs, would focus on the need for a transition to democracy. But the Chilean leader, Gen. Augusto Pinochet, said today in Concepcion, Chile, that he expected to remain President for another term, until 1997. This appeared to be the strongest declaration yet of his intention to hold onto power, which he seized in a military coup in 1973. [ Page 4. ] State Department officials were upset by statements made by General Pinochet that it was possible that the youth, Rodrigo Rojas de Negri, who was born in Chile, had been carrying flammable liquid and set himself on fire.