Drought is among the most dreaded threats as far as natural disasters are concerned wielding, as it does, a significant impact on ecosystems, people's livelihoods, and the socioeconomic development of a country. A significantly large geographic area of India happens to be drought prone. In order to understand people's response to the impacts of drought and their coping strategies, it is crucial to understand their perceptions. Studies investigating community perceptions relevant to drought impacts and concomitant adaptive behaviours are rare in India. This paper documents communities' perceptions of impacts of drought on their livelihood assets and adaptation practices. It does this with the help of the fuzzy cognitive mapping approach in the Mahabubnagar district of India's Telangana state. In order to develop pathways for drought resilient livelihoods we ran simulations for future drought scenarios with various bundles of adaptation strategies enabling us to evaluate their effectiveness in providing resilience against drought. The study also tested the suitability of various activation rules and transformation functions, used for running simulations. Incorporating stakeholders' perceptions, knowledge and beliefs about impacts of droughts, and engaging them in the process of developing drought resilient livelihoods is expected to fine-tune the drought related policy-making.