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In the present study, the observed variability of monsoon droughts over India has been examined using a drought monitoring index, namely the Standardized Precipitation Evapo-transpiration Index (SPEI). For calculating the SPEI over different time periods, long term (1901–2010), high resolution, monthly gridded temperature and rainfall data sets have been used. The drought time series shows significant interannual, decadal and long term trends. The analysis suggests a general increase in the intensity and percent area affected by moderate droughts during the recent decades. In particular, the frequency of multi-year (24 months) droughts has shown a statistically significant increase, which is attributed to increase in surface air temperatures and thus drying of the atmosphere. The wavelet analysis of SPEI suggests significant spectral peaks at quasi-biennial (2–3 years), ENSO (5–7 years) and decadal (10–16 years) time scales, with significant multi-decadal variations. The variability of monsoon droughts over India is significantly influenced by the tropical sea surface temperature anomalies. The Canonical correlation analysis (CCA) suggests that the major portion of the drought variability is influenced by the El Nino/Southern Oscillation (ENSO). Global warming, especially the warming of the equatorial Indian Ocean represents the second coupled mode and is responsible for the observed increase in intensity of droughts during the recent decades.