New Delhi, Aug 11 - The spectre of drought looms large over as many as 161 out of 626 districts in India due to deficient monsoon, Finance Minister Pranab Mukherjee said here Tuesday, but asked citizens not to panic.

'One hundred and sixty one districts have been declared drought-prone. As far as sowing is concerned, 20 percent would be down,' Mukherjee told reporters on the margins of an annual conference with officials of the income tax administration.

'Monsoon situation is still erratic,' he warned, but added: 'But there is no point of pressing the panic button. You all will go and start chanting drought, drought, drought and it will have an adverse impact.'

Mukherjee said Punjab and Haryana - two most important states for food output - were fortunate since they use groundwater extensively, even as Bihar and Uttar Pradesh were facing shortage of water.

Nearly 60 percent of India's farm sector is dependent on monsoon rains between June and September, but this year has witnessed one of the driest spells in eight decades, as per the Indian Meteorological Department.

The met department said the average monsoon rainfall has been deficient by 25 percent in the country for the monsoon period June 1 to Aug 5. The shortfall has been far higher in traditional breadbasket states like Punjab and Haryana.

'We have a contingency plan,' said the finance minister, indicating measures such as allowing import of food grain, continuing with the ban on exports and asking state-run agencies to buy more stocks from the open market.