The Finance Department wanted the Kerala Water Authority (KWA) to scrap 585 work packages under the biggest drinking water supply project, Jal Jeevan Mission (JJM), in the state before granting sanction for a loan of ₹9,000 crore, according to the minutes of the cabinet meeting. The Additional Chief Secretary, Water Resources Department, however, objected to cancelling the projects, saying that it would affect the further progress of JJM. 

The government recently issued an order to provide a guarantee to the KWA to avail of a ₹5,000-crore loan from the National Bank for Agriculture and Rural Development (NABARD) for JJM projects. KWA was forced to seek a loan as the state is struggling to meet the matching share of funds. The project is being implemented on a 50:50 fund-sharing pattern from the state and the Union government. The project aims to ensure the provision of potable water to every rural household in the state through individual Functional Household Tap Connections (FHTCs). 

A total of ₹11,629 crore has been spent so far under JJM in Kerala. Administrative sanction was accorded so far for projects amounting to ₹44,714.78 crore, of which technical sanction was issued for ₹39,452.48 crore. KWA has arranged work for projects worth ₹35,826.87 crore. 

"The state is currently facing a challenge in securing its matching share of funding for this project. The balance state share required for completing already arranged works is ₹12,532.02 crore," the order issued by the government notes. In the wake of the crisis, KWA sought the government's approval to secure borrowings from agencies like NABARD/ Housing and Urban Development Corporation (HUDCO)/ Life Insurance Corporation (LIC) to fund the state's matching share component in the JJM scheme and to obtain a government guarantee for the said loan.

 In the proposal, it was stated that the anticipated revenue from future customers under JJM is expected to be used to service the interest on the loan as well as the loan repayment, and any shortfall in the same can be financed through budgetary support from the government or through an interest-free bridge loan. 

When the file regarding the loan was forwarded to the Finance department, it pointed out that 42 packages for which an agreement has not been executed and 543 packages for which work has not been awarded need to be cancelled. KWA was also asked to maximise the revenue from JJM without any leakage to avoid the need for a bridge loan in future. 

A total of 5,453 packages are being implemented under JJM in the state, of which 1,114 packages have been completed, according to the details available with the KWA. 

The government owes contractors ₹6,039.24 crore for the works which have been completed so far. According to the figures presented in the assembly, there are 5,540 bills still awaiting payment.