The Union Water Resources Ministry issued a clarification after a media report claimed that the Central Water Commission (CWC) had rejected the state's request for funds for the project on technical grounds.
The ministry said the report was "incorrect" and that it had recommended the SAUNI-II project to the Department of Economic Affairs for obtaining external assistance.
"The Water Resources Ministry had conveyed its 'in- principle' approval to the SAUNI-II project to the Department of Economic Affairs in October, 2016," it said in a statement.
This, it added, is a "continuous and consultative" process undertaken at the preliminary project report (PPR) and detailed project report (DPR) stages.
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"In the case of the SAUNI-II project, the CWC had made certain observations on the PPR submitted by the Gujarat government.
"The state government has since submitted a detailed compliance report and the Water Resources Ministry has recommended the SAUNI-II project to the Department of Economic Affairs for obtaining external assistance," it added.
Senior Congress leader Ahmed Patel had recently questioned the Centre as to why it allegedly rejected the state's request for funds for the project.
Responding to it, Gujarat Chief Minister Vijay Rupani had said the state was not dependent on the central funds for the project.
Launched by Modi in September 2012, the project aims at transferring excess water from the Sardar Sarovar dam across the Narmada river through a network of 1125-km-long pipelines to fill up 115 dams in Gujarat's parched Saurashtra region.
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