AbstractMonthly rainfall data from June to October for 39 years were used to compute Standardized Precipitation Index (SPI) values based on two parameter gamma distribution for a low rainfall and a high rainfall districts of Andhra Pradesh state, India. Comparison of SPI with actual rainfall and rainfall deviation from the mean indicated that SPI values under‐estimate the intensity of dryness/wetness when the rainfall is very low/very high, respectively. As a result, the SPI in the worst drought years of 2002 and 2006 in the low rainfall district indicated only moderate dryness instead of extreme dryness. SPI values of the high rainfall district showed slightly better stretching in both positive and negative directions, compared to that of the low rainfall district. Further, the SPI values of longer time scales (2, 3 and 4 months) showed an extended range compared to that of 1 month, but the sensitivity in drought years has not improved significantly.Normality tests were conducted based on Shapiro‐Wilk statistic, p‐values and absolute value of the median to ascertain whether non‐normality of SPI is a possible reason. Although the results confirmed normal distribution, the scatter plot indicated deviation of the cumulative probability distribution of SPI from normal probability in the lower and upper ranges.Therefore, it is suggested that SPI as a stand alone indicator needs to be interpreted with caution to assess the intensity of drought. Further investigations should include sensitivity of SPI to the estimated shape and scale at lower and upper bounds of the gamma distribution and use of other distributions, such as Pearson III, to standardize the computational procedures, before using SPI as a substitute to the rainfall deviations from normal, for drought intensity assessment. Copyright © 2009 Royal Meteorological Society