India government agrees to parliament investigation of corruption

NEW DELHI: India's government has bowed to opposition demands for a parliamentary investigation into a major telecoms corruption scandal, lawmakers said on Sunday, in a move to end months of deadlock and ensure passage of the upcoming budget.

Prime Minister Manmohan Singh is accused of heading a corrupt government that has sold access to the world's fastest growing mobile phone market at rock-bottom prices, depriving the state of billions of dollars in revenue and scaring off investors.

Ruling Congress party leaders have been in negotiations with the opposition for months to reach a consensus on a probe and avoid disruption to the crucial budget session of parliament and allow debate on key reforms in Asia's third largest economy.

"Government has agreed to a JPC (Joint Parliamentary Committee)," Gurudas Dasgupta, leader of the Communist Party of India, said after leaving a cross-party meeting in New Delhi.

The outcome of the negotiations will be formally announced in parliament on Tuesday, said Pawan Bansal, minister of parliamentary affairs.

India's Finance Minister Pranab Mukherjee will present the annual budget to parliament on Feb. 28.

"I am looking forward to a fruitful and productive session of parliament. The government is ready to discuss all issues," Prime Minister Singh told reporters after the meeting.

"I'm hopeful this will be a peaceful and productive session."

The 2G scam, which may have cost the exchequer up to $39 billion in lost revenue, has led to the sacking and arrest of a former minister and a federal police investigation into telecom firms that has hit India's blue-chip Sensex index.

Mumbai is the world's worst performing major stock market this year, with losses of around 11 percent, as worries over corruption keep investors on edge.

Singh has seen his unimpeachable reputation dashed by the scandal, which has hit public confidence in Congress and strained ties with allies in his ruling coalition.

Implicated former telecoms minister A. Raja is a member of the regional Dravida Munnetra Kazhagam (DMK) party that helps Congress to maintain a slim majority in parliament.

The Central Bureau of Investigation raided a television channel owned by the family that runs the DMK last week in connection with allegations that it had been paid $47 million by firms which had benefited from the 2G mobile licence sale.

The DMK, from the state of Tamil Nadu, is not expected to leave the coalition but the probe is testing its links with Congress and could put pressure on its position in the alliance.

The main opposition Bharatiya Janata Party (BJP), emboldened by a series of graft scandals against the Congress party, has demanded the probe since November, paralysing parliament and threatening the budget session, which begins on Monday.

On Friday, a senior BJP leader told Reuters that the party was demanding a wide-ranging probe into the government's role in corruption allegations during October's Commonwealth Games and a property scandal involving cut-price housing for top generals.

But Congress, which had initially refused a JPC due to fears of a protracted process that could see Singh summoned and hurt its chances in upcoming state elections, has rejected demands for a wider investigation into the various graft allegations.

"I am very convinced and optimistic that the stalemate will end," said Meira Kumar, speaker of the lower house of parliament, who chaired the meeting.

Last week, Singh said that he was prepared to appear in front of the committee, and vowed to bring those guilty to justice.

Opposition politicians are not expected to continue demands for a deeper probe when parliament opens.