India's federal auditor is probing the allocation of satellite-based communication spectrum, sources said on Tuesday, intensifying pressure on Prime Minister Manmohan Singh over allegations of corruption involving tens of billions of dollars.
Local media reported that a potential Rs2 trillion ($44.1 billion) had been lost to state coffers in a spectrum allocation by India's space agency, citing auditor sources.
But Singh said that no revenue had been lost as no sale had taken place.
Singh's Congress party-led coalition government has seen its term tarnished by a string of corruption scams that have paralysed parliament, led to the sacking of a minister, and eroded public confidence in the prime minister and his party.
His government has come under heavy fire for a separate $39 billion telecoms scandal involving the sale of mobile telephone licences at below-market prices in 2008.
In the latest scandal, the Indian Space Research Organisation (ISRO) is being investigated by the Comptroller and Auditor General (CAG) for the leasing of transponders on ISRO satellites to private firm Devas Multimedia. The leases granted it access to telecom spectrum without a bidding process, a CAG source who declined to be identified told Reuters.
S-band spectrum can provide broadband internet services in what is a rapidly-expanding mobile phone market. And on the basis of other market deals, a total of $44 billion would have been disbursed had all spectrum allocated to Devas been sold at those prices, local media said.
Officials at ISRO told Reuters that the CAG probe was taking place, but declined to comment further.
Singh's office in a statement said: "No decision has been taken by the government to allocate space segment using S-Band Spectrum to Antrix or Devas. Hence, the question of revenue loss does not arise and any such reports are without basis in fact."
ISRO had told the Department of Telecommunications last year that it would cancel the contract if there was any violation of norms.
The Department of Space said an agreement between ISRO's commercial arm and Devas "is already under review by the Deparment of Space and the government will take whatever steps are necessary to safeguard public interest".
A decision on the matter, it said, would be taken soon.
India is also probing whether state-run telecom firm Bharat Sanchar Nigam Ltd (BSNL) appointed franchises for broadband wireless access without charging any upfront payment, the Hindustan Times newspaper reported, citing a note from the Telecoms minister.
BSNL had appointed franchises on a revenue-share basis, even after paying Rs80 billion ($1.77 billion).
"It has been pointed out that 'cheap access' has been provided to these franchisees by BSNL, including costly broadband wireless access spectrum in metropolitan cities for which BSNL has already made massive upfront payment," Telecoms Minster Kapil Sibal was reported as writing in a note to the Department of Telecom secretary.
BSNL chairman Gopal Das declined to comment when contacted by Reuters, saying he had not seen the newspaper report.