
Heat the coconut milk (or water) until it starts to simmer. This can be done in a pot on the stove, or in the microwave.
Add the desiccated coconut and stir to combine. Cover and allow the coconut to absorb the liquid while off the heat. About 10 minutes is enough (longer if making larger batches).
You can skip the above steps if you’re using fresh grated coconut, but make sure the coconut is thawed if you use frozen coconut.
Adding oil is optional. Place the dhal in a non-stick pan and heat over medium heat.
As the pan heats, move the dhal around on the pan to make sure it toasts evenly and is not burning.
When the dhal starts to turn color, and you can smell the toasty fragrant dhal, remove the pan from the stove. Place the dhal in a small bowl to let it cool down slightly.
Slice the green chili lengthwise first (and optionally remove the seeds only if you want to reduce the level of heat). Then slice the green chili again smaller.
Peel and chop the ginger. Chop the curry leaves. Chop the cilantro. Grind the chana dhal in a spice grinder OR mortar and pestle. See recipe notes below.
Place the coconut (rehydrated desiccated coconut OR freshly grated coconut) in the blender jug. Also add the chana dhal, chili, cilantro, ginger, and curry leaves.
Blend the ingredients together. The mixture will be thick, and you can use the blender stirrer to help with mixing the ingredients.
Add extra water, a splash at a time as needed, to help grind the coconut chutney until it looks fairly smooth. You should not be able to see any green flecks or dhal chunks. The coconut chutney will look uniformly pale green in color, and the coconut should have blended into very small pieces. The coconut should have a fine texture rather than the medium shred it was at the start.
Add enough water to get the consistency you prefer.
Scrape the coconut chutney into a bowl. Taste and season with salt and add a squeeze of lime to taste as well. Set aside.
In a small pan or pot, add the oil and heat over medium heat. Add the mustard seeds and let them heat up with the oil while regularly strirring.
When the mustard seeds start to sizzle, prepare the dried chili by cutting it into small pieces. As soon as the mustard seeds start to pop, add the cumin seeds, curry leaves, and the dried red chili, and sauté for a few seconds until the curry leaves and red chili start to become crisp (but do not let them burn).
Remove from the heat and add the asafoetida (optional) and stir it in.
Immediately add the tempered spices to the coconut chutney and stir it in.
Serve, and enjoy!