India's Supreme Court asked the government on Thursday to probe billion of dollars of illegal funds stashed by Indians abroad, ratcheting up the pressure on the Congress-coalition to fight corruption in high places.

Illegal funds abroad have become the latest headache for Prime Minister Manmohan Singh in a second term plagued by graft scams that have handed a powerful weapon to the opposition and led to parliamentary deadlock, delaying reform legislation.     

India's highest court demanded more be done to repatriate funds illegally parked overseas, estimated by one U.S.-based research organisation, the Task Force on Financial Integrity and Economic Development, at $104 billion since 2000.

Failure to curb corruption in one of the world's fastest growing economies is becoming a serious issue for investors. A group of 14 leading businessmen this month cited a "governance deficit" in tackling a "malaise of corruption corroding the fabric of our nation."     

The Supreme Court has increasingly become more vocal in its criticism of Singh's government, giving credence to the perception among millions of Indians that corruption has reached record levels during his stewardship.

"What has the government done?" the Supreme Court asked Solicitor General Gopal Subramanium, representing the government.

"These are serious issues, what have you done about those names when you got to know about them?... Have you set law in motion against them?," the court asked.     

"Is there no basis to figure out black money? What is the source of black money, which has been stashed away in foreign banks? Is it from arms dealing, drug peddling or smuggling?"     

The court also called for the disclosure of the names of people holding illegally obtained funds overseas. But Finance Minister Pranab Mukherjee said earlier this week that such disclosure will be legally impossible, until agreements with countries, where the money is parked, are drawn up.

In another embarrassment for Congress, the court questioned the appointment of an official, facing criminal charges in a 1992 fraud, as the new head of the top anti-corruption agency.

Attorney General G E Vahanvati, seeking to defend the decision, said that the government's selection committee was not aware of the charges against P J Thomas at the time of his appointment as the chief of the Central Vigilance Commission last September.

The Supreme Court's latest intervention follows its unprecedented criticism of Singh last November for his failure to investigate the improper awarding of telecoms licenses in 2008 in a scam that may have cost the exchequer up to $39 billion. - Reuters