The decision was taken on Saturday night after Chief Minister Arjun Munda met his cabinet colleagues and senior bureaucrats.
The state government estimates a loss of Rs 2000 crore due to the drought and the state will demand a special package from the Centre, sources said.
Reviewing the district-wise rainfall and paddy plantation in a two-hour high-level meeting, the chief minister directed the officials to launch relief work expeditiously and device suitable crop insurance for the farmers to compensate losses.