"Prime Minister Narendra Modi has directed us to issue the money without waiting for utility certificate of the previous allocation," Yadav told reporters here.
He said the states should dig well, borewell, install handpump as per requirements with this fund to help the people meet their water need.
As first instalment, the Centre had released Rs 819.67 crore to 35 states and Union Territories, he said.
Giving details of Rs 819.67 crore released as first instalment, he said Rajasthan received Rs 85.69 crore, Uttar Pradesh Rs 84.04 crore, Maharashtra Rs 80.26 crore, Jammu and Kashmir Rs 53.26 crore and Bihar Rs 45.93 crore.
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Uttar Pradesh, which is locked in fight with the Centre over it sending water train for Bundlekhand region, was allocated a fund of Rs 416.76 crore, of which Rs 332.72 crore remained unspent balance as on May 5, he said.
The Union minister said out of the 13 states facing drought-like situation, Bihar and Haryana have not declared themselves facing drought condition across the state.
"The report sent by these two states (Bihar and Haryana) stating condition of water shortage does not match the ground reality," Yadav, BJP MP from Patliputra constituency in Patna district, said.
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The Union minister said Bihar had declared 19 of its
districts and 160 villages as hit by drinking water shortage "which seems far from true."
He said implementation of 'seven resolves' of Chief Minister Nitish Kumar which includes piped drinking water to every household would take time.
The suggestion given by RJD president Lalu Prasad about digging wells to meet water needs could be beneficial in future.
"But for meeting immediate needs of drinking water, the Bihar government should go back to handpump, among others," he said.
Besides Bihar and Haryana, other states declared as drought-hit are Andhra Pradesh, Chhattisgarh, Jharkhand, Karnatake, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, Telangana, Uttar Pradesh and Gujarat.
"The target is to provide 90 litres of water daily to every citizen by 2022," he added.