- The Centre expanded inadmissible expenses section under Jal Jeevan Mission from seven to ten items
- Tender premiums, excess water supply, and demand-based supply now added to inadmissible list
- Oversized project reports worth Rs 67,000 crore have been put on hold
The Centre has taken a significant step to curb irregularities and the tendency to inflate project costs within the Jal Jeevan Mission by expanding the scope of the list of inadmissible expenses. Previously, this list comprised seven items, which has now been expanded to ten.
Also, directives have been issued to stop "oversized" Detailed Project Reports. Sources said oversized reports to the tune of approximately Rs 67,000 crore have been put on hold.
According to Central government sources, the aim is to reduce costs and put an end to irregularities.
Under the new measures, four additional items have been added to the list of expenses for which reimbursement will be denied: Tender premiums, the operation and maintenance of schemes, provisions exceeding the stipulated 55 liters per person per day service standard, and water supply based solely on demand in urban and other areas.
"Tender premiums" were originally included in the list of inadmissible expenses under the scheme's foundational rules in 2019. These guidelines, however, were relaxed in 2022. The relaxation was implemented to enable the Centre to bear the cost of higher bids submitted during the tendering process under the Jal Jeevan Mission.
Following this amendment, the government incurred an additional financial burden of Rs 16,389 crore across 14,586 projects.
The issue of tender premiums and irregularities within the tendering process has been one of the key controversies surrounding this scheme.
Investigations by the Comptroller and Auditor General, the Enforcement Directorate, and various state Anti-Corruption Bureaus have conclusively established that serious irregularities - on a massive scale - have occurred regarding tender premiums and the allocation of tenders.
What is a Tender Premium?
When the government establishes a base price for a specific project, and contractors submits bids to execute the work at a price exceeding that base figure, the difference is referred to as a "tender premium".
Investigations by various agencies and audits conducted by the CAG have revealed that in states like Rajasthan, tenders were awarded at exorbitant premiums, ranging from 30 per cent to 40 per cent, specifically to benefit a select group of favored companies.
Officials and contractors colluded to form a syndicate. To facilitate this scheme, regulations were altered to make a 'Site Visit Certificate' mandatory, thereby compromising the confidentiality of the bidding contractors.
Consequently, a select group of contractors engaged in collusive bidding - similar to 'match-fixing' - by submitting artificially inflated bids, resulting in massive financial losses for the government.
Focusing solely on tender-related fraud and financial irregularities, thousands of such cases have surfaced across the country. The Rs 960-crore scam in Rajasthan stands as the most prominent example of tender manipulation.
According to the official data from the Union Ministry of Jal Shakti (Water Resources), strict punitive action - including suspension, blacklisting, and the filing of FIRs - has been initiated against 621 officials of the department, 969 contractors, and 153 third-party inspection agencies nationwide due to tender-related and financial irregularities.
As per information provided in the Lok Sabha, punitive action has been taken against over 4,000 individuals.
Mahesh Joshi, former Minister of the Public Health Engineering Department (PHED) in Rajasthan, was arrested - first by the Enforcement Directorate and subsequently, in May 2026, by the Anti-Corruption Bureau - based on evidence regarding his involvement in this scam.
According to the ED's investigation, a bribe amounting to 4 per cent of the total tender value was extracted in exchange for awarding tenders to contractors at inflated rates.
The list of disallowed expenditures also explicitly prohibits the use of funds for payments related to the construction of guest houses or other government buildings. Complaints have emerged in certain states, alleging that state governments diverted funds allocated under the 'Jal Jeevan Mission' for the construction of government administrative buildings.
Consequently, the Centre suspended further payments to these states.
In one instance, a state government had initiated a drinking water supply project within the state capital under the ambit of the Jal Jeevan Mission. The guidelines, however, disallowed expenditures explicitly prohibit the provision of water supply services in urban areas. Payment was withheld here as well.
