India had hoped the two-week international sporting competition in October would highlight its rapid development and boost its role on the world stage. Instead, it was deeply embarrassed by accusations of graft, construction delays and cost overruns as the games' budget ballooned by billions of dollars beyond the $US412 ($NZ514.8) million price tag organisers had initially estimated.
Reports about filthy athletes' accommodation, unfinished construction projects and security woes further battered the country's image and encouraged scorn against the organising committee chief, Suresh Kalmadi, who had promised a spectacle to rival the 2008 Beijing Olympics.
Just weeks before the Games, the government placed several ministers on Kalmadi's organising committee after an audit body identified concerns over bidding procedures and inflated costs. And within days of the October 14 closing ceremony, officials launched a laborious investigation with raids on committee members' offices and homes.
There have since been numerous arrests, and a government report last month said delays, inefficiency and waste had cost the country $US355 million.
On Monday, the Central Bureau of Investigation - the Indian equivalent to the FBI in the US - took Kalmadi himself into custody after questioning him at its headquarters.
The arrest came as little surprise amid the mounting inquiry, during which Kalmadi was fired as parliamentary secretary for the governing Congress Party. He had kept his organising committee job while the investigation continued, but on Monday was suspended from Congress itself as the party sought to limit damage from his arrest.
"Let there be no ambiguity," Congress spokesman Manish Tewari said, "appropriate, demonstrable and visible action will be taken."
Investigators said the 67-year-old Kalmadi - the highest-ranking official arrested in the probe - has been charged with conspiracy for allegedly favouring a Swiss company in the purchase of equipment for timing and scoring events, bureau spokeswoman Dharini Mishra said. His aides Lalit Bhanot and V.K. Verma were arrested last month in the same case.
The bureau claims the government was bilked out of 1.41 billion rupees ($US31 million), paid to Swiss Timing Ltd for equipment available from a Spanish company for less. It said competition for the contract had been wrongfully restricted, with no clear criteria for selecting the winning bids and alleged coercion and threats against those making the final decision. It was not immediately clear if Swiss Timing was also accused of alleged wrongdoing.
The opposition Bharatiya Janata Party - which had claimed millions were siphoned off by companies run by relatives of Games officials - said Kalmadi's arrest would not have happened unless investigators had "certain proof."
"This is only the tip of the iceberg," the party's president, Nitin Gadkari, told reporters in Mumbai, according to Press Trust of India.
Kalmadi is due to appear in court tomorrow for a custody hearing. Investigators also arrested two more officials - Surjit Lal and A.S.V. Prasad - and said more suspects would be taken into custody in coming days.
