Yes you are right. Blue wire coming out of the distributor is broken.
But when i closed this connection using a multimeter on amp mode, no current was flowing and also the RPM didn't go up from zero. So it was not only this issue, there must be some other problem. Either the signal was not coming out of the distributor, or the wire from the distributor to the guage cluster was open.
I checked the voltage using multimeter and it showed me that current is flowing out from the distributor in that blue wire.
So next i checked for the continuity of the blue wire from the distributor till the guage cluster.
Its a long way so had to check it in parts from various connectors and it was ok.