8 December 2010 Last updated at 10:54 ET

India 'telecoms scam': Ex-minister Raja's homes raided

A Raja denies having undersold licences to mobile phone firms

India's top investigation agency has raided houses owned by a former telecoms minister allegedly involved in a corruption scandal, reports say.

India's Central Bureau of Investigation conducted searches on Andimuthu Raja's houses in Delhi and Madras.

Mr Raja quit last month, denying allegations that he had undersold mobile phone licences.

Meanwhile a report accuses the Indian state as being the country's biggest culprit when it comes to corruption.

The report by the Heritage Foundation - a think-tank in Washington - says that slow and unwieldy bureaucracy deters Indians from complying with rules and regulations and only serves to fuel the black market.

It is still extremely difficult, the report says, to set up a new business - the process is fraught with delays and high costs.

As a result, it says that many businesses do not bother becoming official at all. The uncertainty creates fertile ground for corruption.

'Incriminating documents'

The allegations against Mr Raja have been described by some analysts as the country's biggest-ever scandal - with critics claiming the alleged misappropriation of funds amounts to about $37bn (£23bn).

The Indian mobile phone market is worth billions of dollars

The BBC's Mark Dummett says that the row over the scandal has become the biggest political issue in India, with parliament brought into deadlock over the opposition's demands for a cross-party investigation into the matter.

CBI spokesperson Vineeta Thakur said that searches were conducted at "residential and official premises of Mr Raja and several of his [former telecommunications ministry] officials".

"The searches started early in the morning and until now 14 places have been searched. Incriminating documents have been found during the searches, which are still going on."

The home of Mr Raja's former personal secretary, RK Chandolia, is believed to be among the premises that were searched.

Mr Raja is accused of issuing 2G licences in 2008 on a "first-come, first-served" basis instead of auctioning them, costing the government billions of dollars in lost revenue.

Biggest market

Critics said the low return was underscored when India's auction in May of 3G bandwidth for mobile phone services ended up reaping $15bn, twice the sum expected.

Mr Raja presided over the world's fastest growing mobile market; there are about half a billion mobile phone subscribers in India.

His political party, DMK, is one of the largest partners in India's ruling Congress-led coalition.

Mr Raja has complained that he has been "condemned, charge-sheeted, tried and convicted by the media".

"My stock is so low that anything I say does not redeem my position," he said in a statement.