The Ministry of Finance (MOF) on Friday allocated 86.7 billion yuan (about 12.69 billion U.S. dollars) from its reserve to drought-hit areas in relief funds.
Of the total, 71.6 billion yuan will be given to farmers for buying relief materials, and the other 15.1 billion yuan will go to grain producers to supplement incomes.
The central government announced Thursday it would earmark 300 million yuan for local governments, in addition to 100 million yuan previously allocated.
The MOF ordered local governments to channel the funds to farmers as soon as possible. In the worst drought-stricken provinces, the funds should be given to farmers within one month.
Persistent drought has hit most of the country's wheat production provinces.
In the government's first document this year, China reiterated that the development of agriculture and rural areas in 2009 was ofspecial significance.
Added to severe big-dry areas such as Henan, Shanxi, Shaanxi, and Gansu, drought has spread to other several provinces, including Hubei, Hunan, Sichuan, Yunan, and Qinghai by February 2.
The area of affected crops has expanded to 161 million mu (10.73 hectares). 4.37 million people and 2.1 million head of livestock are facing drinking water shortages, according to data released by the Office of State Flood Control and Drought Relief Headquarters.
MOA data showed more than 2.3 million mu (153,300 hectares) of wheat seedlings in Henan, Anhui and Shandong provinces had perished.
China declared the highest level of emergency on Thursday in response to the rare drought which began in November. President Hu Jintao and Premier Wen Jiabao have ordered all-out efforts to combat the severe drought in the country's vast wheat-growing area to ensure a good summer harvest.