Top govt sources concede that Gen Singh's claim could have grave consequences for the credibility of India's peace initiatives in the Kashmir Valley.
There is disquiet and anger within the government over former Army Chief VK Singh's claim that secret military funds were channeled through Kashmir politicians for what he has called "stability projects."
Top government officials concede that this could have grave consequences for the credibility of India's peace initiatives in the Kashmir Valley. Officials now say that the priority is to investigate whether allegations made against General Singh in an internal Army report are accurate.
The Army's inquiry reportedly concludes that a secret intelligence unit set up by General Singh had funded a J&K minister to destabilise the Omar Abdullah government in the state.
In response to that allegation, the former chief has claimed that money was given to ministers in the state, but it "wasn't for their personal use or political reasons. It was not a bribe. It was meant to organise events to win the hearts and minds of people and get them away from separatist propaganda."
Government sources said most of what the retired General has said "sounds completely wrong", but did add that "If what Gen Singh has said is true, then what has happened is completely wrong. The Army has no business making payments to or through politicians. But let us not jump to that stage yet. It will need to be probed further."
Refusing to elaborate on how such an investigation would be conducted or by which agency, sources admitted that there has been "enormous damage" as a result of the controversy and that questions that hurt India's interests could even be raised by Pakistan.
General Singh, who has campaigned against corruption alongside Gandhian activist Anna Hazare post retirement, has suggested that he is being persecuted for revealing his political leanings. He has not yet joined the BJP, but shared the stage recently at a Haryana rally with the BJP's prime ministerial candidate, Narendra Modi.