Mumbai: A late monsoon in the parched Northern agricultural states is putting the country's tentative economic recovery at risk, according to experts.

Economists and analysts said another week's delay before the monsoon hits Uttar Pradesh, Madhya Pradesh, Haryana, Rajasthan, Delhi and Punjab would lead to a fall in the estimated gross domestic product (GDP) growth for the financial year to March 2003.

The states are all at risk of drought after weeks of low rainfall.

Agriculture Minister Ajit Singh on July 16 said the government might be forced to declare a drought in the Northern states if rain does not fall soon.

"We would then have to take steps as to how to fight the situation. Probably, farmers may have to be offered financial help to change the crop pattern in these states," Singh said.

The Confederation of Indian Industry (CII), the leading industrial lobbying body, said a drought could lead to a 0.5 per cent drop in GDP growth.

"We are definitely worried," said CII's director of economic affairs K C Ravi, adding that the group was preparing a paper on the likely impact of a drought.

"Even one more week of delay in the monsoon in these states can affect the economic recovery process.

"We have not yet worked out the details, but agriculture growth of below 5.7 per cent can have a multiplier effect on other key sectors, and in turn lead to a fall of around half-a-per cent in the GDP."

He said a drought would be a severe blow to India's economy that has been on the road to recovery in recent months after a long stagnant period.

The government and the central bank have estimated GDP growth at 6.5 per cent for the financial year and Prime Minister Atal Behari Vajpayee on July 13 has targeted eight per cent within five years.

On July 12, figures released by the government said India's industrial output had risen by 3.8 per cent year-on-year in May, boosted by strong growth in manufacturing and mining, pointing to a recovery in industry.

The manufacturing sector, which mirrors demand in the economy, grew 3.7 per cent in May compared with 1.8 per cent in the same period in 2001.

Industry accounts for 25 per cent of India's GDP and its recovery is heavily dependent on strong agricultural growth.

The other key sector, cars, is also showing signs of a recovery after a sluggish phase lasting nearly two years. Commercial vehicles were leading the way, analysts said.

Cement is also showing heady growth driven by a series of infrastructure projects, including the $ 4.9 billion "Golden Quadrilateral" highway connecting the four metropolitan areas of Mumbai, New Delhi, Kolkata and Chennai.

However Motilal Oswal Securities' vice-president Ramkrishna Kumar said 2001's bumper harvest would help offset the monsoon delay.

"The farm income is definitely going to rise given last year's bumper agriculture output which was at a record 214 million tonnes," he said, adding the higher farm income would translate into increased industrial sales.

"There is a concern that the ongoing seed-sowing season may be affected if the monsoon is delayed. However, I think it is still premature to talk of a overall poor monsoon effect," Kumar said.

And the Meteorological Department confidently predicted rain from next week over most parts of India as there was a low-pressure area over the North-West Bay of Bengal-Orissa coast.

"These developments raise hopes not only for the further advance of the monsoon to the northern areas left uncovered by it so far, but also for the revival of rainfall in other parts of the country as well," a department spokesman was quoted by the 'Business Standard' as saying.