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.

The prime minister had cautioned Monday that the reduced production of kharif crops, sowing for which coincides with the monsoon, may have an inflationary impact on prices of food items in the coming months.

He, accordingly, urged all states to work together with the central government and activate the public distribution system.

'The contingency plan for crops, drinking water, human and animal health, fodder should be brought into operation without delay and a close watch kept on availability of food grain and prices of essential commodities.'

During the meeting Tuesday, FICCI requested the prime minister to consider various measures to boost productivity in other sectors of the economy so that the growth can be maintained.

'With farm sector performance likely to be weak this year, it becomes important for us to further push manufacturing and services sector to pick the slack,' FICCI president Harshpati Singhania said in his proposal to the prime ninister.

'We feel the situation is better for large borrowers. But small and medium enterprises are not getting the benefit of low rates. They find it difficult to meet the requirement of banks. So there is a need to find for alternative sources of funds for them.'

FICCI also said investments in agri-market infrastructure should be included in the priority lending of the banks and also, extend weather based insurance programme to all states and all crops.