The top politician in India's capital New Delhi was arrested Thursday in a graft probe his supporters say is aimed at sidelining opponents to Prime Minister Narendra Modi ahead of national elections.

Arvind Kejriwal, Delhi's chief minister and a key leader in an opposition alliance challenging Modi in next month's polls, was detained after several hours of questioning by the Enforcement Directorate, India's main financial crimes agency.

The government of Kejriwal, himself an anti-graft campaigner, has been accused of corruption in the allocation of private liquor licenses and a probe in the matter has already seen two of his top allies jailed.

Delhi education minister Atishi Marlena Singh confirmed the arrest and said Kejriwal remained the state's chief minister.

"We made it clear from the beginning that if needed, Arvind Kejriwal will run the government from jail," she said.

She described his arrest as a "political conspiracy" orchestrated by Modi's ruling Bharatiya Janata Party (BJP).

"I want to tell Prime Minister Modi that Arvind Kejriwal is not just a human but an idea," Singh said. "If you think that by arresting one Arvind Kejriwal you can finish that idea, you are wrong."

Kejriwal's government introduced a controversial policy to liberalise the sale of liquor in 2021 by inviting private players to set up stores, ending a government monopoly.

The policy was withdrawn in 2022 and the resulting probe into the alleged corrupt allocation of licences saw the jailing of two senior members of Kejriwal's Aam Aadmi Party (AAP).

Kejriwal had resisted multiple summons from the Enforcement Directorate to be interrogated as part of the probe.

He is among several prominent opposition leaders subject to criminal investigations that supporters say are politically motivated.

Rahul Gandhi, the most prominent member of the opposition Congress party and scion of a dynasty that dominated Indian politics for decades, was convicted of criminal libel last year after a complaint by a member of Modi's party.

His two-year prison sentence saw him disqualified from parliament for a time until the verdict was suspended by a higher court, but raised concerns over democratic norms in the world's most populous country.

Congress leaders called a press conference Thursday to announce that an ongoing investigation into its tax filings had left its bank accounts frozen and the party bereft of the funds needed to fight this year's election.

Kejriwal's AAP, Congress and more than two-dozen other parties have formed an alliance to jointly contest national elections running between April and June.

Modi and the BJP are strongly favoured to win a third term in the polls.