Notwithstanding a delay in monsoon, India's leading think tank Tuesday sought to allay fears that a poor farm growth would adversely impact industrial growth.

"Till not very long ago, the years of poor industrial growth were usually preceded by a bad agricultural year. However, of late, this link appears to have broken," says Council for Applied Economic Research (NCAER) in its latest report.

The NCAER study on the correlation between the deviation in the average monsoon rainfall of a year from the long period average with the Index of Industrial Production (IIP) growth of succeeding year showed it was 0.90 for the period 1994-98 but dropped to 0.13 for 1999-2003.

This signified "considerable weakening of the correlation between agricultural production and industrial growth," says the report.

In the last three years, 2002 and 2004 were bad monsoon years while 2003 was very good. Yet, manufacturing growth remained buoyant in the three years exceeding six percent per annum.

"With the declining share of the agriculture sector in the overall gross domestic product (currently 20 percent), it was inevitable that the relationship between agricultural production and industrial growth got weakened," according to the think tank.

The NCAER attributes this development to two factors. One is India's integration into the global economy that resulted in reducing the reliance of industries on only domestic supplies as a source of raw material. The second is the rise in revenues of non-farm income in rural areas.

"The penetration of various types of financial products offered by both the banking and non-banking sectors, particularly for financing of consumer durable products, into semi-urban and even in many cases into rural areas, has weakened the link between farm income and rural expenditure on manufactured products," the report says.

This perhaps is best reflected in the sale of motorcycles, the trajectory of which has remained unaffected by the outcome of the monsoon.

Booming exports and a relatively unaffected domestic market, particularly due to the growing middle-class' appetite for goods and services, are reasons attributed to the Indian manufacturing industry continuing to register good growth irrespective of the farm industry outcome.

The think tank is not unduly worried by the fact that the monsoon did not arrive in Kerala by June 1 and its progress has not been satisfactory so far.

The NCAER said: "A poor or good start to the rainy season is no indicator of the monsoon's eventual performance." It cites the example of last year when despite the monsoon arriving on time, the rainfall for the whole four-month season from June-September was only 87 percent of the long period average.

On the contrary, in 2003 despite the monsoon arriving a week late, the season ended with rains being 105 percent of the long period average.