Relevance: GS-2 (Government Policies), GS-3 (Infrastructure – Water) | Source: The Indian Express

1. The Core News Context

In May 2026, the Union Government released the Jal Jeevan Mission (JJM) 2.0 Guidelines, extending the scheme until 2028.

The biggest update is the strict ban on paying “Tender Premiums” using Central government money. This step is taken to enforce financial discipline and stop states from using Central funds to pay for heavily inflated contracts.

2. Understanding JJM

• The Goal: Launched in 2019 by the Ministry of Jal Shakti, it aims to provide tap water to every rural household.
• The Standard: It guarantees exactly 55 Litres Per Capita Per Day (LPCD) of clean drinking water.
• Who Pays? (Funding Pattern):
  • 100% by the Centre for Union Territories (without legislature).
  • 90:10 (Centre:State) for Himalayan and North-Eastern States.
  • 50:50 for all other States.
• Who Runs It? It is driven by local village committees called Pani Samitis, ensuring a bottom-up administrative approach.

3. The Core Issue: The “Tender Premium” Loophole

To understand the problem, we must look at how contractors were paid:

• What is a Tender Premium? When a private contractor bids for a project at a price higher than the government’s official estimate, the extra amount is called a tender premium.
• The Original Rule (2019): The Centre strictly refused to pay for this extra cost. If states wanted to hire expensive contractors, they had to pay the extra amount from their own state budgets.
• The Mistake (2022): The rules were relaxed. The Centre allowed states to use Central funds to pay these inflated contractor bids.
• The Ground Reality: States took advantage of this loophole. It caused a massive cost escalation of over Rs 16,839 crore across India, draining the Central treasury.

4. The Solution: Strict New Rules in JJM 2.0

To fix this leakage, the new guidelines enforce strict fiscal discipline:

• No Central Funds for Premiums: “Tender premiums” are officially marked as inadmissible expenses. States must now bear 100% of any cost escalation.
• Strict Supply Cap: The Centre will not fund projects that try to supply more than the mandated 55 LPCD limit.
• No Funds for Maintenance: Central money cannot be used for Operation and Maintenance (O&M), land purchase, or staff salaries. Gram Panchayats must collect local user charges to maintain the pipelines.

5. UPSC Value Box

• Pani Samitis (VWSCs): Village Water & Sanitation Committees. They are local statutory bodies responsible for planning, operating, and managing rural water infrastructure.
• Article 282: A Constitutional provision that allows the Centre to give discretionary financial grants to States for public welfare schemes like JJM.
• Source Sustainability: The administrative practice of protecting and recharging groundwater (like rainwater harvesting) so that newly installed taps do not run dry in the future.

UPSC Prelims Practice Question

Consider the following statements regarding the Jal Jeevan Mission (JJM):

1. The mission mandates a standard supply of 55 Litres Per Capita Per Day (LPCD) of safe drinking water to all rural households.
2. Under the scheme, the Central Government covers 100% of the project costs for all Indian States and Union Territories.
3. According to recent JJM 2.0 guidelines, Central funds cannot be used to pay for the regular Operation and Maintenance (O&M) of the water infrastructure.

Which of the statements given above are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2 and 3

Correct Answer: (c) 1 and 3 only

Explanation:

• Statement 1 is correct: The mission sets a strict service delivery standard of 55 LPCD.
• Statement 2 is incorrect: Funding is 100% only for UTs without legislatures. It is 90:10 for NE/Himalayan states, and 50:50 for other states.
• Statement 3 is correct: O&M is an “inadmissible expense” for Central funding. Local bodies must manage O&M, usually by collecting user charges.