Swami Baba Ramdev went ahead with his hunger strike after cabinet ministers dispatched by Prime Minister Manmohan Singh failed to persuade him to call it off.
Ramdev, who has a huge television following for his daily yoga show, has called for the death penalty for government ministers who are proved to be corrupt.
He also wants the government to repatriate so-called "black money" - cash stashed in
foreign accounts and suspected of being used for bribes and illegal transactions.
“After all this money is brought back, no one will be hungry, uneducated, unemployed," he said.
Ramdev, who claims he can "cure" homosexuality, cancer and Aids through yoga and other alternative therapies, is supported by right-wing Hindu groups and is receiving massive television coverage.
Thousands of people gathered in the New Delhi heat to watch Ramdev fast in a tent on a site where an annual Hindu festival marking the triumph of good over evil.
The Congress government, which has been hit by a series of graft scandals, issued a late-night statement assuring Ramdev and his followers that the maximum penalty for corrupt officials would be "substantially increased".
It also promised speedy trials for people accused of corruption but stayed silent on the guru's demand that they should hang.
Another social activist, 73-year-old Anna Hazare, fasted for 98 hours in April demanding a tough anti-corruption law and thousands have joined protests against graft.