4 min readNew DelhiUpdated: May 18, 2026 11:24 AM IST
A key safeguard to regulate spending under Jal Jeevan Mission, the Centre’s showpiece rural tap water scheme, has been reinstated in new rules to govern the initiative — plugging a gap that had led to cost escalations in projects far beyond official estimates.
The safeguard, called “Tender premium”, refers to the additional amount quoted by a project bidder that is higher than the Government’s estimated cost. It was part of the original rules for the scheme drafted in 2019, and effectively meant that states were not allowed to use Central funds to cover the additional amount.
On June 21, 2022, the Union Jal Shakti Ministry deleted the words “Tender premium” from the list of “inadmissible expenses” while amending the guidelines. On May 21 last year, an investigation by The Indian Express of data uploaded by states and Union Territories on the Jal Jeevan Mission dashboard showed that the change in guidelines resulted in additional costs totalling Rs 16,839 crore for 14,586 schemes — an increase of 14.58 per cent from the estimated cost.
The Government has now moved to plug this gap in the new guidelines, “Operational Guidelines Jal Jeevan Mission 2.0 Har Ghar Jal”, which will govern the scheme in the second phase till 2028.
The new guidelines were finalised by the ministry last month after the Union Cabinet in March approved the extension of the scheme till 2028 — with additional funding from the Centre of Rs 1.51 crore above its share of Rs 2.08 lakh crore for the first phase (2019-2024).
According to the new guidelines, which have been circulated to the Central ministries involved, state governments, MPs and Collectors, “Tender premiums” has been added again to the list of “inadmissible expenses”.
Check back in place
A dilution of rules in 2022 allowed states to use Central funds to cover inflated bids for projects under the showpiece rural tap water scheme. The latest rules reinstate a check on such spending.
“A suggestive list of inadmissible expenses includes: i. Expenditure on purchase of land, vehicles, etc; ii. Payment of centage charges; iii. Construction, renovation, or repair of buildings, offices, conference halls, guest houses or residential buildings; iv. Tender premiums; v. Diversion of JJM funds to state schemes; vi. Expenditure exceeding the estimated or approved cost of schemes; vii. Salary payments for permanent employees; viii. Operation and maintenance (O&M) of schemes; xi. Provision of service levels beyond 55 lpcd; x. Meeting urban/ other sectoral water demand,” the new guidelines state.
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The new guidelines also make it clear that the Centre will not provide financial support to states for the scheme where service level has been planned beyond the JJM norm of 55 Litres Per Capita Per Day (LPCD).
The original rules of 2019 stated: “In case of any cost escalation beyond the approved cost, it will have to be borne by the concerned State and UTs with legislature and no additional expenditure out of Central share will be permitted.”
The 2022 rules excluded the words “Tender premium” and stated that the approved cost “shall be the cost as discovered through an open, transparent and competitive bidding process as per prevailing rules”. The 2022 rules also stated that wherever the “approved cost” is 10-25 per cent more than the estimated cost at which a tender was invited, approval by the head of the State Level Scheme Sanctioning Committee (SLSSC) should be taken before the contract is sanctioned.
In July 2025, two months after The Indian Express investigation of data from the JJM dashboard was published, Union Jal Shakti Minister C R Patil said the Centre had stopped the payment of “Tender premium” under the scheme.
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Responding to a question on the omission at The Indian Express Idea Exchange, Patil said, “We have stopped the payment of tender premium. What was there, what has gone is a different matter, but what is new has been completely stopped.” The latest rules are a confirmation of that position, sources said.
