India’s PM concedes to new telecom scam probe

India’s premier on Tuesday bowed to opposition pressure to set up a cross-party probe into the government’s tainted 2008 sales of telecom licences which cost the country up to $40 billion.

Prime Minister Manmohan Singh’s announcement came as his embattled Congress government sought to clear the way for parliamentary passage of the national budget to be presented at the end of the month.

The opposition had paralysed the last session of parliament by holding daily protests demanding an investigation into the cut-rate sale of second-generation (2G) telecom licences that was overseen by ex-telecom minister A. Raja.

The parliamentary probe, which could last for months, coincides with an ongoing police investigation into what has been described as one of the biggest corruption scandals in India’s history.

Raja, who stepped down last November, has been arrested and is currently in jail, while a host of senior businessmen including Anil Ambani, one of India’s richest tycoons, have been questioned over the alleged scam.

“We can ill-afford a situation when parliament is not allowed to function,” Singh told lawmakers a day after a new parliamentary session opened.

“It is in this special situation that the government agrees to the setting up of a joint parliamentary committee,” said Singh, who had repeatedly rebuffed opposition demands for the probe.

The premier reiterated to parliament that his government “is committed to rooting out corruption”.

Singh has been battling to salvage his upright reputation amid opposition accusations that he turned a blind eye to government corruption in the interests of preserving his coalition administration.

Raja, a politician from a key regional party in Singh’s coalition government, is suspected of rigging the rules for the sale of mobile licences and bandwidth to favour certain companies.

An investigation by the national auditor concluded that losses from the flawed first-come, first-served sales process could amount to $40 billion dollars, though the government disputes this estimate.

Scandals ranging from the Delhi Commonwealth Games last October to the so-called 2G telecom scam have led to months of bad publicity, sapping the popularity of Singh’s administration.

Singh added, in a rebuke to the pressure tactics of the opposition, that “we must try to resolve our differences in a spirit of cooperation and collaboration”.

Observers say the ruling Congress party’s woes have led to policy drift with important economic reform legislation put on hold.