NEW DELHI — India's financial crimes agency has raided the house of an opposition MP over corruption allegations.

Sanjay Singh, from the governing Aam Aadmi Party (AAP) of Delhi, is the latest party leader to be interrogated by federal agencies.

Authorities are investigating alleged fraud related to a now-scrapped liquor sale policy in the state.

Delhi's deputy chief minister Manish Sisodia was also arrested in the same case in February.

The AAP has strongly denied the allegations, accusing the Bharatiya Janata Party (BJP), which runs the federal government, of playing "dirty politics".

Questions around financial misconduct are a sensitive matter for the AAP, which emerged from a major movement against corruption more than 10 years ago.

The party has also frequently been at loggerheads with the BJP as it tries to position itself as a key opposition force.

Officials from the Enforcement Directorate (ED) arrived at Singh's house early Wednesday morning to question him, the PTI news agency reported.

Officials said they would also search other AAP politicians linked to the case.

Investigations first began in August last year when India's federal investigation agency CBI accused the Delhi government of using a new policy to favour certain liquor dealers who had allegedly paid bribes. The scheme was subsequently scrapped.

Based on the CBI's investigation, the ED also registered a case under India's money laundering act. In February, the CBI arrested former Deputy CM Manish Sisodia in connection with the case — he also denies the allegation but remains in jail.

Singh has not yet commented on Wednesday's raids but his party said it was confident that nothing would be found.

"The ED raid is a result of Sanjay Singh being vocal about the Adani issue and the black money invested in his company," AAP spokesperson Reena Gupta said. "Neither they (ED) found anything earlier, nor they will find anything today. None of us is afraid."

Ms Gupta was referring to a report published by US-based investment firm Hindenburg Research in January, accusing the Adani Group of decades of "brazen" stock manipulation and accounting fraud — the group denies the charge.

Singh had repeatedly raised the issue in parliament, demanding an investigation into the allegations. He had also asked Prime Minister Narendra Modi to address the matter in the house.

Last year, Delhi's health minister Satyendra Jain was arrested in connection with a money laundering case — he has denied the allegations, and is still in jail after a Delhi court rejected his bail plea. — BBC