NEW DELHI (AFP) - India's government on Wednesday offered millions of dollars to states hit by drought or floods, marking half the funds for a western zone were millions face their worst water shortage since 1972.

Agriculture Minister Sharad Pawar said a federal ministerial panel which he headed agreed to dole out nearly 29 billion rupees (S$664 million) to seven states which last year faced drought, flooding or other natural disasters.

"We have approved the relief package, which is the highest in recent years," Mr Pawar said and added the panel agreed to hand out 12 billion rupees to drought-stricken Maharashtra, his home state in western India.

"The drought situation in Maharashtra is the worst seen in the last 40 years," Mr Pawar said, according to the Press Trust of India (PTI).

The minister also promised additional help to the parched region, where suicide by debt-ridden farmers is also rampant.

Millions in some 10,000 parched villages in the western state were affected by the 2012 drought, officials reports say.

Last year's searing drought in Maharashtara is blamed on two successive poor monsoons in the region while others say a public policy failure also deepened the crisis for thousands of small growers.

Gujarat and Kerala states would also get drought relief, PTI said and added cash would be doled out also to Andhra Pradesh, Himachal Pradesh, Sikkim and Uttarkhand to tackle disruptions from floods, landslides or excessive rains.

With nearly three-quarters of Indians dependent on rural incomes, the yearly monsoon is a lifeline - especially given that about two-thirds of farmland is not irrigated and depends entirely on seasonal rain.

The 1972 drought led to a massive shortage of food grains and commodity prices spiked, forcing New Delhi to jack up imports, while another crippling drought in 2009 also inflated prices and hardship.