India faces biggest drought of the century

Union Finance Minister Pranab Mukherjee on Tuesday warned that the country was facing the biggest drought of the century as a delayed and deficient monsoon continues to adversely affect agriculture in several parts of the country.

The Finance Minister, however, assured that there was no need to panic as the government was taking adequate steps to meet the situation.

Expressing concerns over the situation, Pranab said that the severe drought will also affect the country's economic growth, which is expected to be below 6% this year.

The warning from the Finance Minister comes at a time when as many as 161 districts have been declared drought-hit across the country.

Pranab's warning assumes significance in the wake of a report by the India Meteorological Department (IMD) that the average monsoon rainfall has been deficient by 25% in the country for the monsoon period June 1 to August 5. The IMD report also said that the shortfall has been far higher in traditional breadbasket states like Punjab and Haryana.

PM reviews drought situation

Earlier on Monday, Prime Minister Manmohan Singh attended a high-level meeting including 13th Finance Commission Chairman Vijay Kelkar and Planning Commission Secretary Sudha Pillai to discuss the drought situation in different parts of the country.

The meeting holds importance as the government is planning to provide more resources to states to battle the impact of poor monsoon on kharif (summer crop) and spiralling prices of essential food items.

The Prime Minister has also urged the state governments to draw up contingency plans to deal with the situation without delay.

The Prime Minister also offered all assistance to the states from the Central government to deal with the situation and said the government "should not hesitate to take strong measures and intervene in the market" if the need arises.

The PM, during a recent meeting with the chief secretaries, had advised the state governments to seek more assistance from the National Calamity Contingency Fund (NCCF) to deal with the drought situation.

While the Planning Commission is involved in allocation of resources towards Plan schemes, the Finance Commission, which is a constitutional body, deals with distribution of taxes, collected by the Centre, among states.

The Finance Commission is expected to submit its report to the government by October end for the five-year period beginning April 1, 2010.