The arrests were made within seven hours of the theft coming to light in the district in Vidarbha region of Maharashtra, they said.
The incident occurred at Rural Hospital in Wani, over 700km from here, from where a two-day-old child, a boy, was stolen by unidentified persons, an official said.
The woman who delivered the child in the hospital on Sunday found him missing at around 1.30 am today. On not finding her baby in the hospital, she approached the Wani police station and lodged a complaint, he said.
Police then interrogated hospital staffers after which it came to light that one of them Ganesh Waghmare (32) and another person, Srikant Kuralkar (26), had stolen the child.
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Police nabbed Waghmare, Kuralkar and on the basis of information provided by them, they reached Ramesh Kumbharkar (42), the main accused who runs a food stall in the area, he said.
During interrogation, Kumbharkar admitted he had planned the theft with Waghmare to help his brother-in-law, who stays in Telangana and didn't have a child, he said.
The couple, along with the child, boarded a state transport bus going to Telangana, said Ashok Kakde, the investigating officer in the case, said.
The local police alerted their Telangana counterparts about the incident. The Wani police took the newborn's mother with them and rushed for Telangana, he said.
The Telangana police intercepted the bus near Asifabad and apprehended Badhawat and his wife, and took custody of the child, he said.
During investigation, it was been revealed Badhawat was to pay Rs 60,000 for the child and had given Rs 30,000 as advance to Kumbharkar, he added.