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Pour the Milk in a heavy bottom pan / pot and heat in medium - low flame only. Use a big sized ladle and stir in -between making sure not to burn the milk in the bottom of the pan. Bring the milk to a boil . When its start to boil ( you will see the milk will rise up and bubbles , froth from the milk will start to come )
Add the water diluted lemon juice slowly into the boiling milk. Reduce the flame to LOW.
Stir the milk ONCE or TWICE. When the milk curdles completely and clear water starts to separate (approximately 5 to 10 minutes) , switch off the flame and remove from heat.
Cool down the mixture for a while . You can see the milk and water will completely get separated during this time.
Pour the curdled mixture into a fine meshed sieve and place a wide bowl below to catch the drained water ( this drained water can be used in recipes). Now run cold tap water (for few seconds) on the curdled paneer crumbs to remove any lemon flavor.
Now spread a muslin cloth / cheesecloth (is a cotton cloth with fine weave) . Transfer the paneer crumbs from the sieve to the muslin cloth for setting.
Now place the muslin cloth with paneer back to the sieve and place any heavy weight on the paneer for an hour until any excess water gets drained.
After an hour keep the paneer without opening the muslin cloth inside the refrigerator and place some weight and leave it overnight or at-least 2 to 3 hours. Then remove the paneer from the cheese cloth
Cut it into desired shapes and freeze it or put the whole block paneer without cutting into a Ziploc and freeze it. When you are going to use it in the recipes , thaw , cut into the shapes and use.
*Do not keep milk in high heat and boil , It will get burned in the bottom very quickly and whole milk/ paneer will get burned smell.
* Simmer to low flame after adding the lemon juice and do not stir much after that.
*Resting / cooling time is important before straining it into the Sieve .
*Running Cold tap water for few seconds is optional , but it will remove any lemony flavor in the paneer.
*Refrigeration Time for one-two hours (place any weight on the paneer) is important before cutting the paneer into desired shaped .It helps the paneer to set well.
*Use SHARP Serrated Knife to cut the panner.