Residents in an estimated 60 cities and 60,000 villages in the states of Gujarat, Rajasthan, Maharashtra and Andhra Pradesh are struggling to find drinking water, and their crops have already withered away.
The government has said it is sending more emergency food aid and MPs have decided to donate a month's salary to relief efforts.
The move came after a debate in parliament on the crisis, believed to be the worst in 100 years.
MPs of all political parties pledged to set aside their differences and work together to provide quick relief.
Residents in an estimated 60 cities and 60,000 villages in the states of Gujarat, Rajasthan, Maharashtra and Andhra Pradesh are struggling to find drinking water, and their crops have already withered away.
Hundreds of thousands of cattle and goats have died, but so far, no human deaths have been linked to the drought.
The BBC's Daniel Lak, who is in the western state of Gujarat, says that the area looks almost like a desert in the north and west with few glimpses of greenery.
The government's handling of the crisis has been sharply criticised.
'Too little too late'
Both government opponents and supporters raised objections to the way the administration was dealing with the drought during a special debate in parliament on Monday.
Prime Minister Atal Behari Vajpayee made a personal appeal to the nation for financial help during a televised broadcast on Sunday.
The government ordered special trains to be sent to the worst-affected areas with emergency supplies of water, but opposition parties accused the authorities of failing to prepare for the emergency.
The failure of monsoons for two years running, has exacerbated long-running water shortages in one of India's driest regions.
And according to one forecast, India is likely to receive less rainfall during the monsoon this year compared to last year.
"The overall monsoon rainfall for the country this year has been forecast to be about 789 millimetres (31 inches) against 840 millimetres last year," according to Prashant Goswami of the Bangalore-based Centre for Mathematical Modelling and Computer Simulation.
Media criticism
Newspaper commentators added their voice to the criticism of the government for not doing enough to help.
"No government, either in the states or at the centre, should therefore pretend as though drought has sneaked in this year and surprised everyone."
State officials in Gujarat reject criticism that not enough was done to prevent water shortages becoming a crisis.
They point out that a lack of rain has left an area measuring 1,200 sq km without surface water since November and they have already been delivering water in tankers.
But aid groups said that in some areas, government supplies of water were only available every few days.
In other areas, tap water is available for just 15 to 20 minutes a day.
The monsoon is not expected to arrive for at least another month, and it is feared that those who have lost cattle and crops will be dependent on food aid for years.