CBI begins quizzing former minister A.Raja over telecoms row

Former telecommunications minister Andimuthu Raja (C) comes out of the airport in New Delhi December 22, 2010.

NEW DELHI (Reuters) - The Central Bureau of Investigation (CBI) questioned former telecommunications minister A.Raja over the country's biggest corruption case on Friday, a move the government hopes will help ease a crippling political row with the opposition.

Andimuthu Raja is being investigated over his role in the sale of telecoms licences, which a government audit says may have been given too cheaply to ineligible firms in 2007-8, causing a potential government revenue loss of $39 billion.

The case has led to the most serious political standoff in recent times in India with an assertive opposition disrupting the last session of parliament which ended this month, demanding a joint inquiry which would have the power to summon the prime minister for questioning.

The standoff has put policymaking in limbo and economic reforms have been delayed in Asia's third-largest economy.

CBI spokesman R.K. Gaur said Raja was being questioned at the federal agency's New Delhi office.

Although there is little threat to the Congress party-led government, a series of scandals has eroded its image since an impressive election victory last year, and is testing how Prime Minister Manmohan Singh tackles widespread corruption.

Raja, a member of the DMK party which is a member of the coalition, denies any wrongdoing.

The DMK party, which initially backed Raja, has lately sought to distance itself from him, signalling it was unlikely to withdraw its support from the government. The DMK depends on Congress support to rule in Tamil Nadu.

Corruption is widespread in India and prosecutions are rare, particularly of high government officials or political leaders.

The world's second-fastest growing major economy ranks 87th on graft watchdog Transparency International's list based on perceived corruption -- a worse rank than rival China.

The opposition is hoping to sustain the pressure on the government until the parliament's budget session in February with a two-month protest campaign. Some of the biggest state elections begin in May and stretch over the next two years.

The deadlock in parliament is more of a concern for foreign investors than corruption, as it means longer-term financial reforms will be stalled, which could hurt growth.

Singh and his government have also been struggling to contain the damage from a bribe-for-loans scandal which implicated state-run banks and sizeable private companies and, graft at the Commonwealth Games.

On Friday, CBI officials raided the homes of Suresh Kalmadi, chief organiser of October's Commonwealth Games, and took away documents and evidence they said could be related to "financial irregularities" in the staging of the event.

"I have always said I will cooperate with any probe and we did that today," Kalmadi told reporters.

Earlier, the Supreme Court had criticised the CBI for not questioning Raja in its year-long investigation despite him being at the centre of the inquiry.

The country's top court has also dragged the prime minister into the scandal by forcing him to answer questions on why he was slow to act against Raja.

(Writing by Krittivas Mukherjee; Editing by Robert Birsel)