NEW DELHI The Indian government gave almost $150 million to 12 drought-hit states Sunday as industry warned the dry weather would shave up to one percentage point off economic growth in the current fiscal year.

A statement by Prime Minister Atal Behari Vajpayee's Office said the government would also launch efforts to offset the crippling effects of the drought, caused by failed monsoons across large parts of India.

Announcing the funds for the 12 states, the statement said 7.1 billion rupees ($147 million) were being given in addition to 4.8 billion rupees already handed out earlier this month, AFP reported.

However there are concerns the money will not be enough with the worst-hit state, Rajasthan, alone seeking 60 billion rupees from the federal government to feed 2.1 million drought-hit families.

Some 300 of India's 525 districts spanning the 12 affected states are facing their worst drought since 1987.

India's main opposition Congress Party criticized the handout and accused the federal government of discriminating against affected states not ruled by Vajpayee's Hindu nationalist BJP Party or its legislative allies.

"Certainly, this is just not enough," Congress-ruled Karnataka State Chief Minister S.M. Krishna said as the party said Vajpayee must release 120 billion rupees without any discrimination.

Congress-ruled Maharashtra, of which Bombay is the state capital, also criticized Vajpayee's government.

"When we were in power the Congress did not discriminate against states which were not governed by us," added party General Secretary Ambika Soni.

Vajpayee's coalition government already faces flak from the opposition for failing to anticipate the drought or taking steps in advance to help farmers.

Domestic industry, meanwhile, predicted the drought could take one percentage point off annual economic growth in the fiscal year to March 2003, bringing it down to between 5.0 and 5.4 percent.

Prior to the drought, industry had forecast the economy would grow by six percent in the ending in March, after two sluggish years.

"With the delay in monsoons and the declaration of drought in many states, growth of the overall economy is likely to end up between 5.0 to 5.4 percent," the Confederation of Indian Industry said, after a snap poll of business leaders.

The government has already warned the drought's impact on agricultural production could bring overall gross domestic product growth down by 0.5 percentage points.

A fall in rural incomes and purchasing power is bound to hit industrial sectors such as cement, tractors, two-wheelers and fast-moving consumer goods, economic experts said.

The misery caused by the drought has been compounded by floods in the eastern states of Bihar and Assam due to abnormal rains, which has affected some six million people.

The CII said the government should release a large quantity of surplus food leftover from the previous year's bumper harvest to provide relief for victims of drought and floods.

It also urged a massive nationwide food-for-work program be started and rural roads and infrastructure be built.