RPT-UPDATE 1-India parliament deadlock may be resolved-sources

Tue Feb 8, 2011 3:46pm IST

(Refiles adding title and first name of Raja in paragraph 10)

(Adds details, quotes)

By Nigam Prusty and Krittivas Mukherjee

NEW DELHI, Feb 8 (Reuters) - The government appeared close to agreeing to a parliamentary probe into India's biggest corruption scandal in decades after a possible climbdown by Prime Minister Manmohan Singh to pave the way for the budget to be passed later this month, sources said.

At the centre of the graft charges is a potential $39 billion fraud in awarding of telecoms licences in 2008. The opposition forced the December parliament session to shut, demanding a parliamentary probe into the scam.

The Congress party-led coalition government has seen its second term tarnished by a string of corruption scams that have led to the sacking of a minister and eroded public confidence in the prime minister and his party.

On Tuesday, the government held its third round of talks with opposition parties in a bid to break the deadlock and several members of the ruling coalition who attended the meeting said the government would likely to agree a joint investigation.

The government has for months opposed a parliamentary probe, fearing a long-drawn out investigation could overshadow key state election campaigns this year and worried politicians including Singh would have to appear before the investigating committee.

"The government cannot make an announcement now as parliamentary convention requires such a decision to be announced in the house," a lawmaker of one of the coalition allies who attended the meeting told Reuters.

The lawmaker said Finance Minister Pranab Mukherjee, the government's chief trouble shooter, told the meeting that "no price is dearer than running parliament".

A senior Congress source said: "The mood today is that the government needs to do everything to distance it from corruption. We expect the government will eventually agree."

Another round of meeting to break the deadlock is likely before parliament opens where the government could informally tell the opposition that it will order a joint probe.

Opposition parties have called on Singh to resign, saying he avoided pursuing a case against former telecoms minister Andimuthu Raja, who belongs to a party that is key to maintaining the coalition's majority.

There is no risk to the passage of the 2011/12 budget as the government has the required numbers, but the lack of debate will add to a sense of a breakdown in governance in Asia's third-largest economy. (Editing by Alistair Scrutton)