The Folger Theatre Group, fearing large budget deficits, has suspended its 2-year-old practice of bringing two productions a year to the Kennedy Center's Terrace Theater.

The decision to eliminate the plays from the 1981-82 schedule was made late Thursday by Folger producer Louis W. Scheeder in consultation with vacationing Kennedy Center chairman Roger L. Stevens.

The company has run in the red during previous seasons, but "I'm worried about building up a bigger deficit," Scheeder said yesterday, citing the discouraging earnings of last year's productions: "Museum," a satire about public reaction to modern art, by Tina Howe; and "How I Got That Story," a surreal comedy about Vietnam, by Amlin Gray.

"Of course, we lose money on everything we do," Scheeder said; but he had been worried for months that a substantial loss on the coming year's plays would force the nonprofit group into severe financial hardship. The Folger, which has a budget of $1.4 million for the coming year, derives 60 percent of its income from ticket sales and depends for the remainder on grants, principally from the Cafritz Foundation, the Ford Foundation and the National Endowment for the Arts.

"I've been scrambling around all summer to find either a really exciting project or a situation where we had lots of funding to back us," Scheeder said. In the absence of either, and with a late-August deadline for informing the Kennedy Center, from which the Folger leases space, Scheeder canceled the Terrace plays and cut the number of productions from last year's seven to four for 1981-82, all of which will be performed at the Folger Theatre.

Folger subscribers will be notified of the cancellation on Monday and will receive a refund of one-third of the season-ticket price.

For the coming season -- which begins with "Julius Caesar" previewing Sept. 29 -- production runs will be extended to 10 weeks from the usual eight, and no further reductions in cast or production costs are expected. "I don't want to be in a position where we have to cut back the quality of what we do," Scheeder said.

The 12-year-old company's first production in the Terrace was Robert E. Ingham's "Custer" in the fall of 1979. It was followed in the spring of 1980 by "Charlie and Algernon," a thoughtful musical by David Rogers and Charles Strouse, which opened at the Terrace and later appeared in expanded form at the Eisenhower Theater. In September 1980 the Folger group and Stevens co-produced the show on Broadway where it met with disappointing reviews and closed in two weeks.

Scheeder now believes that the Terrace may be an inappropriate house in which to nurture a new show. "I don't want to try and develop a new play for a $14.50 ticket at a 500-seat theater," he said.

Kennedy Center director of operations Thomas R. Kendrick said yesterday that if the Folger were to cancel its productions, "the Center would move immediately to replace them with presentations of equal merit."