NEW DELHI // India's prime minister has bowed to opposition demands to set up a cross-party investigation into the government's sale of telecom licences in 2008 that cost the country up to US$40 billion.
Prime Minister Manmohan Singh's announcement came as his embattled 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 previous winter session with daily protests calling for an investigation into the cut-rate sale of second-generation (2G) telecom licences that was overseen by the former telecom minister, A Raja.
The parliamentary inquiry, which could last for months, coincides with a police investigation into what has been described as one of the biggest corruption cases in India's history.
Mr Singh has been battling to salvage his upright reputation amid opposition charges that he turned a blind eye to government corruption in the interests of preserving his coalition administration.
In return for Mr Singh's retreat after he had repeatedly rebuffed calls for a cross-party investigation, the opposition promised to stop blocking parliamentary proceedings.
Sushma Swaraj, the leader of the opposition Hindu nationalist Bharatiya Janata Party (BJP), said: "We should not see this as a victory or defeat. This is a victory of democracy."
Mr Raja, who stepped down in November last year, has been arrested and is in jail, while a host of leading 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," Mr Singh told MPs, a day after the new parliamentary session opened.
"It is in these special circumstances that our government agrees to the setting up of a joint parliamentary committee," said Mr Singh, who had previously insisted that police and other investigations were adequate.
The prime minister reiterated his government "is committed to rooting out corruption".
Mr Raja, a politician from a key regional party in Mr Singh's coalition, is suspected of rigging the rules for the sale of mobile licences and bandwidth to favour some firms that then sold their stakes for massive profits.
An investigation by the national auditor concluded losses from the flawed first-come, first-served sales process could amount to $40 billion (Dh147bn), though the government disputes this estimate.
Analysts say the parliamentary investigation could be a rough ride for the Congress-led coalition as many of the players who received the telecom licences are seen as having links to the government.
Scandals ranging from the Delhi Commonwealth Games last October to the 2G telecom sale have led to months of bad publicity, sapping the popularity of Mr Singh's administration during its second term and rattling foreign investors.
The corruption scandals come as the government is also fighting voter anger over high food prices.