Grind together grated coconut, green chilli, cumin and turmeric powder with 3-4 tbsp water to a smooth paste.
Rinse the toor dal 4-5 times and pressure cook with 2.5 – 3 cups water (refer notes for details). Mash the cooked dal with a wooden spoon. Add 1 cup hot water to the mashed dal and bring it to boil. Reduce flame to lowest and add coconut paste and salt. Mix well.
Cook for 5-7 mins on low flame. Add drumstick leaves. Cook for another 5-6 mins on low flame.
Meanwhile in a small pan, heat oil and crackle mustard seeds. Add sliced small onion and curry leaves. Fry till the small onion becomes golden and add to dal. In the same small pan (no need to add extra oil), roast the dried prawns (if using) for 2-3 mins and add to the dal. Mix well.
Let the curry rest for 20-25 mins, for the flavour to settle in.
Serve with rice or chapati.