India's main opposition party, the Bhatariya Janata Party (BJP), has asked its most prominent member in the south to stand down after he was formally implicated in an illegal mining scandal. The scandal could harm the recent corruption-busting effort across the country.

A new report into illegal mining in the southern state of Karnataka names the state’s chief minister, Bookanakere Siddalingappa Yeddyurappa, on a list of 500 people it says have been involved in illicit activities. The incident is a blow to the BJP's efforts to undermine the ruling Congress party, which has suffered from many corruption scandals in recent months.

The report by India's anti-corruption board claims Chief Minister Yeddyurappa has been involved in a number of corrupt activities. It includes accusations that a mining company deposited $2 million into a trust run by his sons, and that the same company purchased property from a son-in-law for 20 times its value. The scams could have cost India up to $3.6 billion in lost revenue, according to the report.

Just a day after the report was officially released (parts had already been leaked to local media), the BJP has called for Mr. Yeddyurappa to resign.

"It has been decided there has to be a change in the leadership of the BJP legislature party in Karnataka. Accordingly, Mr. Yeddyurappa has been advised to tender his resignation immediately," said BJP spokesman Ravi Shankar at a press conference in the Indian capital New Delhi.

Yeddyurappa, in turn, has denied the allegations, but it is believed he is preparing to step down.

Reputation for corruption

India has suffered significant reputation damage in the past year, with corruption allegations against government ministers and bureaucrats. In one case, the former Telecommunications Minister Andimuthu Raja is charged with selling 2G spectrum contracts at a grossly undervalued price, costing the Indian government an estimated $40 billion.

The BJP has sought to gain political mileage from these incidents, but its credibility as a party campaigning on anti-corruption values has suffered a blow, given that rumors of Yeddyaruppa's links to illegal mining have been around for more than a year.

The Karnataka leader has long been a vital cog for the BJP, as he is their most high-profile – and powerful – politician in south India. But the release of the report made it clear that keeping him would no longer be viable.

"The BJP can now say that the only corrupt element in the party, Yeddyurappa, has now been sacked, and that it is now a clean party," says Pankaj Prasoon, director of the Centre for Indian Political Research and Analysis. "The BJP's actions are aimed at sending a message that corruption will not be tolerated. For the time being, no other party can attack it [on that issue]," says Mr. Prasoon.

There are growing concerns about the scale of illegal mining in Karnataka, the state that is home to global IT hub Bangalore. Karnataka is a major source of iron ore, and has found a hungry market for it in China. The kingpins are the Reddy brothers, who in addition to owning large tracts of mining land, also now hold state government ministerships.