Drought has vastly impacted agriculture all over the globe. However it’s impact on crop production: degree and extent is poorly characterized. As the occurrence of more extreme droughts is likely to increase under climate change, understanding the vulnerability of crop production to droughts is a crucial to evaluate and determine the size of the losses. In this study, we used drought events in the South Asia region during the time period 2003-2018, to compare various indices developed for the study of drought phenomena. Three indices namely: the precipitation condition index (PCI), vegetation cover index (VCI) and temperature condition index (TCI) depend on remote sensing data were assimilated to produce an integrated drought severity index (IDSI) to estimate drought conditions. We also correlated the IDSI anomaly with the yield anomaly in the region. The results showed that IDSI has a good correlation with yield anomaly. The study also investigated the influence of drought on area harvested (ha) production (hg/ha) and yield (tons). Economic losses were assessed using the empirical relations between crop yields, IDSI, monthly precipitation, and annual precipitation. The results showed agriculture GDP (AGDP) has a statistically significant correlation (p-value < 0.01) with economic loss and the correlation coefficient R2 registered 0.32, 0.82, 0.84, 0.51 0.79 and 0.81 in Afghanistan, Pakistan, India, Bhutan, Nepal and Bangladesh respectively. The results of this study offer scientific support for decision-making targeted towards disaster mitigation and adaptation under climate change by identifying the regions in which drought risk control and management.