Livelihoods are secured when households have secured ownership of or access to resources and income-earning activities, including reserves and assets, to offset risks, ease shocks and meet contingencies. Indian subcontinent is highly vulnerable to major natural disasters such as earthquakes, cyclones, floods, droughts, landslides and bushfires. The research study was conducted in five districts in Hyderabad Karnataka region during 2009-10 to find out the effect of drought on agricultural activities, impact of drought situation on economic condition of farmers and to identify the extent of coping mechanism adopted by the farmers under drought situation. Over the years, there was decrease in number of animals during drought year, being noticed in draft animals [-3.06%] followed by cross breed cows [-2.04%], whereas increasing number of milk animals [4.08%] has been observed in total livestock population. The livestock management during drought situation included coping up measures like conservation of fodder followed by purchasing of fodder from others [27%], getting fodder from relatives and friends [20%]. The landless laborers can only resort to seasonal migration due to lack of productive assets or availability of alternative employment options in the village. Small/marginal farmers use a variety of adoption options such as sale of cattle, shifts to other subsistence crops, wage labour, as rural non-farm sectors [RNFS] as well as seasonal migration.  This range of options, however, constitutes only temporary coping measures.  During adverse periods, farmers have implemented a range of livelihood and coping strategies to reduce their vulnerability