Wash sabudana in a colander until water runs clear. Transfer to a bowl and soak in water overnight or for 6-8 hours. Most of the water should be soaked when you are ready to cook.
To check if the sabudana is ready, press a pearl in between your fingers, and it should mash easily.
Heat a pan on medium-high heat and add oil. When the oil is heated, add cumin seeds and green chili to it. Once the cumin seeds start to sizzle, add the diced potatoes.
Then, if using, add the grated carrots and green peas and cook for another 2 minutes. If using fresh green peas, add them along with the potatoes, so they are cooked well.
Add the soaked sabudana, crushed peanuts, salt and sugar. Mix well.
Change to low-medium flame, cover with a lid and let it cook for about 2-3 minutes. Open and stir, then cook again for couple more minutes without a lid. Do not overcook. When the sabudana is cooked, the pearls should be translucent, not sticky. Remove pan from heat.