Andimuthu Raja, India's telecommunication minister, has resigned from his post after allegations that he had given out lucrative telecoms licences at low prices.

Raja's resignation on Sunday came after intense pressure following a government inquiry found that the sale of second generation, or 2G, wireless spectrum had resulted in a 1.76 trillion rupees ($39 billion) loss to the treasury.

Critics charge that Raja's allocation of 2G spectrum was improperly based on 2001 prices and unfairly awarded licenses on a "first come, first served'' basis, rather than by auction.

Raja belongs to the Dravida Munnetra Kazhagam (DMK) party, which is one of the largest partners in the ruling Congress-led coalition government. Its support is crucial for the government's majority.

"In order to avoid embarrassment to the government and maintain peace and harmony in parliament, my leader (DMK chief M. Karunanidhi) has advised me to resign," Raja was quoted as saying by the Press Trust of India news agency.

Al Jazeera's Prerna Suri said that Rajah is still defiant about his innocence and has said he will let the courts decide what happens next.

She said that the Indian government was concerned about the developments.

"This is not just any domestic corruption scandal that the government here is worried about, it is also about India's image on the international business stage."

Parliament had been repeatedly stalled as the opposition demanded Raja's resignation and an investigation into the allocation of licences.

Raja's resignation follows Congress' sacking of two senior members over other corruption allegations, in a bid to repair the party's image ahead of a series of state elections critical to the coalition's strength.

There have been a string of corruption scandals during the last six years of Congress party-led rule and few have been brought to justice.