Add coconut, green chili, ginger, lemon juice, and salt to the blender. Do not add all the water yet.
Pulse 8 to 10 times until the coconut looks like wet sand. Scrape the sides.
Add 1/4 cup water. Blend to a coarse paste. Add the remaining water 1 tablespoon at a time until it drops slowly from a spoon. Taste. Add a pinch of salt or a few drops of lemon if it tastes flat.
Make the tadka
Heat the oil in a small pan on medium. Add mustard seeds. When they pop, add urad dal and chana dal.
Stir 20 to 30 seconds until the dals turn pale gold. Add curry leaves and the dried red chili if using. They should hiss, not blacken.
Pour the tadka over the chutney, oil and all. Stir once. Serve right away, or rest 10 minutes so the tadka flavor moves through the bowl.
Notes
Grind coarse. A smoothie-smooth coconut chutney tastes pasty.If the chutney tastes bitter, a thick ginger piece or chili seeds are usually why. Blend in 2 tablespoons extra coconut.Optional body: add 1 tablespoon roasted chana dal (dalia) to the grind. I skip it when I want the coconut to stay front and center.Store in an airtight container in the refrigerator for up to 2 days. It thickens when cold. Loosen with a spoon of water and a squeeze of lemon before serving.I do not freeze this one. The coconut weeps and the tadka goes stale.