The Mallanasagar dam, estimated to cost Rs 9,800 crore, is set to store 51 thousand million cubic feet of water and irrigate close to 12 lakh acres of land in Telangana. However, the project will have significant impact on 14 villages, eight of which will be completely submerged. The project, requiring about 20,079 acres of land, has run into land acquisition issues for the compensation package it offers.

In July 2017, farmers from Vemulghat village were 400 days into a hunger strike, protesting against the construction of the reservoir. Having started in June 2016 when the project was announced, they were persistent in their demand for the implementation of Right to Fair Compensation in Land Acquisition, Rehabilitation and Resettlement Act, 2013, which would fetch them market rates as against the low rates the government was offering. Earlier in July 2016, the state had briefly imposed Section 144 on the village until the high court ordered its removal in September 2016.

In July 2017, five more villages joined the protest demanding that the government first notify them before acquiring lands and then compensate them suitably. This was because the notification for land acquisition was issued in newspapers with the names of farmers without seeking their consent, and no time and space were given to people for filing their objections and opinions.

Besides protests and strikes, villagers had also actively filed petitions and memorandums against the government's moves. In 2016, the village residents challenged Government Order 123, which violated the 2013 Land Acquisition Act, which led to the high court ruling in their favour.

In January 2018, the court directed the Telangana government to stall the process of land acquisition in Vemulghat village, the only village yet to agree to give up its land. The court ordered the state to attend to their objections before commencing the process of land acquisition.

In February 2021, the houses being built for the residents in the rehabilitation and resettlement colony were opened for them to visit and inspect. The construction is not over yet, but the villagers have been asked to vacate to a temporary facility until the work on the houses is completed. They have, however, decided to wait so as to shift directly to their permanent houses.

In March 2021, state officials resolved to address the grievances of the oustees, with works on the reservoir nearing completion. To this end, separate counters have been opened at the tahsildar and RDO offices for affected villagers to submit their grievances regarding rehabilitation.

On 11 November 2023, the Telangana High Court directed the state to grant separate housing to 80 widows, recognising them as separate family units. This challenges the government’s GO 120 from June 2017, which ambiguously defines "family" as including a person, their spouse, minor children, and minor siblings dependent on them, with terms like ‘single family’ and ‘family living together’ but without clear definitions. GO 120 expects widows and widowers to live with their children, denying them separate housing. In contrast, the 2013 Land Acquisition Act clearly treats widows, divorcees, and deserted women as separate families eligible for individual rehabilitation. The High Court ruled in favour of the widows, stating there was no evidence they had consented to their benefits being paid to other family members, affirming widows and unmarried women should receive separate benefits.

On 10 December 2024, the petitioners, including affected farmers, filed a representation with the Telangana government, asserting their right to a rehabilitation and resettlement (R&R) package. The petitioners turned to the Telangana High Court after the District Collector disregarded their representation. According to the applicable legislation, Justice K Lakshman ordered the Siddipet District Collector to take the petitioners' demands into consideration and offer remedies within four months.

On 16 July 2025, BRS leaders joined farmers in a protest demanding that the Congress government release water from the Mallannasagar project into the Konda Pochamma Sagar reservoir to support farmers. If the state government does not provide water to the canals that supply farmers in Medak and the adjacent districts, Kotha Prabhakar Reddy, a Dubbak MLA, threatened to forcibly open the Mallannasagar reservoir's gates. In order to boost monsoon farming, he called for the quick release of water to important canals such as Kudavelly Vagu, Shankarampet Canal, and Ramayampet Canal while speaking at the Rythu Maha Dharna at the Medak Collectorate.

The Telangana government formally requested a CBI probe into alleged irregularities in the Kaleshwaram Lift Irrigation Scheme on September 1, 2025. After the matter was handed over to the CBI, the BRS started the "Chalo Mallanna Sagar" initiative in September 2025.

The CBI reviewed reports from the National Dam Safety Authority, Vigilance and Enforcement, and the PC Ghose Commission. After preliminary scrutiny, the CBI sought Home Ministry's approval to register an FIR and requested additional documents. The PC Ghose Commission's 665-page report, tabled in the state Assembly, found serious lapses and irregularities, attributing blame to the previous BRS government and former Chief Minister K Chandrashekhar Rao.

Meanwhile, the Telangana High Court has stayed any action based on the report pending a hearing on 7 October, following petitions by KCR and former Irrigation Minister Harish Rao to quash the report