NEW DELHI  A widening corruption scandal that has touched India’s prime minister sent the country’s stock markets down sharply on Friday and threatened to tarnish the country’s image as a rising economic power.

Setting off the turmoil was a report from the country’s auditor earlier this week that about $40 billion in wireless spectrum license fees had been squandered by the government’s telecommunications and information technology minister.

On Thursday, India’s Supreme Court criticized Prime Minister Manmohan Singh for failing to respond for more than a year to a request to investigate allegations that the licenses had been sold at well below market rates to politically connected companies.

While Mr. Singh was in no way implicated in the scandal, it was a rare rebuke of the mild-mannered economist, known as the father of India’s economic liberalization.