Congress also demanded that the CBI should probe a "nexus between the police and ultras" in the state.
However, the BJP has termed "baseless" the allegations levelled by the Congress.
"We have received information that cash worth crores was given to naxals by the ruling government via some unknown person ahead of the Jiram Valley attack," the Madhya Pradesh Congress Committee (MPCC) president Bhupesh Baghel said in a press conference here.
Baghel said that the allegations had earlier been levelled against the government that it had given money to secure release of IAS officer Alex Paul Menon from Maoists' captivity in 2012.
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"But, so far no probe has been conducted to verify the accusations," he said, alleging that there is a "nexus" between the police and ultras in the state.
"Abhay Singh worked for the police in its fight against the left wing extremism (LWE) in Sarguja. When he tried to expose the nexus between police and ultras, he was lodged in jail after being implicated in false cases," the Congress leader said and demanded a probe by the CBI into the "links" between the police and rebels.
However, senior BJP leader and MLA Shivratan Sharma rejected the allegations, terming them "baseless".
He said the Congress was levelling such allegations as it has no issues to raise against the state government.
"The BJP government has been continuously making efforts to wipe out the LWE. Like Sarguja region (north Chhattisgarh), Bastar region will soon be freed from the naxal menace, he said.
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