The government on Tuesday said 64% of the country was staring at a drought and announced a 50% subsidy on diesel supplies to farmers to boost irrigation and a relief package of more than R1,900 crore to soften the blow of a 20% deficit in seasonal showers so far.

More districts are facing dry spells this year than in the whole of 2009, agriculture minister Sharad Pawar said after chairing a meeting of the empowered group of ministers (EGoM) on drought, adding that 400 of the 627 districts have witnessed dry spells so far. The EGoM on drought, which met for the first time since 2009 when the country witnessed the worst dry spells in 37 years with a 23% deficit in showers, will meet again this week after a review of affected areas, the minister said.

Interestingly, no district in the country has so far been declared drought-hit, although conditions akin to drought prevail in many parts of the country.

To mitigate the impact of drought, Pawar said the 50% subsidy on diesel to farmers will be shared equally by the Centre and the states concerned. This apart, R1,440 crore will be offered to improve integrated watershed management in Karnataka, Maharashtra, Rajasthan and Gujarat, and R453 crore under the National Rural Drinking Water Programme (NRDWP) to Maharashtra, Karnataka, Rajasthan and Haryana. The panel also approved R38 crore as interim relief to Karnataka, Rajasthan and Maharashtra.

Seasonal monsoon showers have trailed the benchmark 50-year average by 15% in July hurting summer sowing, Pawar said, adding that the India Meteorological Department (IMD) will issue a revised forecast of the rainfall for the entire season later this week.

With this, the IMD will issue its third revised forecast for the June-September monsoon season. The IMD had in April had predicted normal showers, at 99% of the benchmark 50-year average this year, but trimmed its rainfall projection in June to 96%, with a margin of 4%.

The deficit in monsoon rains, the main source of irrigation for around 60% of the country?s farm land, has reinforced fears that farm production this summer may be clipped for the first time in three years stoking inflation. Food prices in India have remained stubbornly high since the drought in 2009, despite two successive years of bumper grain output.

After a brief moderation in December and January, food inflation again crept up and touched 10.81% in June, and another year of poor rains could aggravate price rise.

The minister said imports of oilmeal cake, a key animal feed, will be allowed at zero duty to boost domestic supplies. The poultry industry has complained depleting stocks of animal feed are driving up costs and pushing up meat and egg prices.

Pawar said the country had adequate seeds to implement contingency plans for lower rainfall and food stocks are more than adequate to meet requirements. He ruled out curbing exports of farm items, as domestic supplies of key items remained adequate.

Earlier on Tuesday, Planning Commission deputy chairman Montek Singh Ahluwalia told Reuters that poor monsoon will make it politically harder for the government to increase prices of subsidised fuel, delaying a reform needed to rein in the country?s fiscal deficit.

Citing risks to inflation from poor monsoon, the Reserve Bank of India on Tuesday left key interest rates unchanged and raised its headline inflation forecast for the fiscal year through March 2013 to 7% from 6.5% earlier.