Jal Jeevan Mission: Justify increase in cost of tap to Rs 1,37,500 from Rs 30,000, says Finance

In a fresh concept note circulated to various ministries and departments on February 13, 2025, the Jal Shakti Ministry projected the revised outlay for the mission at Rs 9.10 lakh crore, substantially higher than Rs 3.60 lakh crore when it was originally conceived in 2019.

When contacted, Ashok KK Meena, Secretary, in the Department of Drinking Water and Sanitation, said, “I would not like to comment at this stage.”

At first glance, it was the cost estimate of providing the remaining 3.96 crore tap connections that caught the attention of the Department of Expenditure and the Department of Economic Affairs in the Ministry of Finance.

“It is not clear why the cost of providing tap water to the remaining rural households of about 4 crore number of units, has gone up manifold… may provide necessary justification for the time and cost overruns incurred with respect to the original Cabinet approval of Rs 3.6 lakh crore which was planned to achieve 100 per cent coverage till 2024,” said the Department of Economic Affairs, responding to the concept note.

The Jal Shakti Ministry denied there were any time and cost overruns in its response to the justifications sought by the Finance Ministry. “Various states and implementing agencies informed that unprecedented increase was observed in prices of various input materials (costing around 60% of total cost of project), the price volatility, non-participation in tender, non-completion of works as per timelines, especially due to Covid situation and Ukraine war, which affected the implementation adversely,” it said.

The Ministry further said to take care of the cost escalation due to various events, it had been decided to allow ‘tender premium’ after approval by the Jal Shakti Minister. ‘Tender premium’ refers to the difference between the actual cost as per the tender floated and the government’s Schedule of Rates.

According to the DEA, nearly 12 crore rural households were provided tap connections since 2019. The Centre and states spent Rs 3.60 lakh crore (Centre — Rs 2.08 lakh crore and states — Rs 1.52 lakh crore) for this. Now, the DDWS has projected the mission to cost an additional Rs 5.5 lakh crore (Centre — Rs 2.79 lakh crore, states — Rs 2.71 lakh crore) for providing tap connections to 4 crore households.

“DDWS may, therefore, consider providing detailed justification for the additional Central share worth Rs 2.79 lakh crore to achieve coverage of remaining 4 crore rural households along with the reasons for increased per capita cost of connection,” the DEA said.

The Department of Expenditure in the Finance Ministry too sought to know the reasons for the upward revision of the outlay for the mission. “Further, if the cost overrun is because of the time overrun, then the reasons for the time overrun may be clearly specified,” it said.

The Jal Shakti Ministry not only denied there were any overruns, but also said the cost of the project originally estimated in 2019 was much higher. Referring to a July 17, 2019, memorandum of the Expenditure Finance Committee (EFC), it said, “After consultations with state governments in 2019, the cost of infrastructure was worked out to be Rs 7.88 lakh crore for 14.59 crore households. However, the budgetary envelope was kept at Rs 3.60 lakh crore, and it was proposed to follow the incentivising route for nudging the states/ UTs to create the Piped Water Supply infrastructure giving access to all the rural households in the country.”

In a note for the EFC that met on March 13 this year, the Jal Shakti Ministry said the Cabinet had in 2019 restricted the Centre’s share for the mission at Rs 2.08 lakh crore. It pointed out that additional liabilities of ongoing works are being met by states. Data provided by the Ministry shows that till January 31, 2025, states have incurred Rs 31,000 crore additional liabilities. So, the Jal Shakti Ministry has also proposed a one-time settlement towards these liabilities incurred by states in the note for the EFC.