The three-foot statue of Haritika alias Tara Devi, which was excavated only last month, had gone missing from the famous Buddhist centre of Sirpur, 84 km from here. It was recovered from a village in Dhamtari district Wednesday.
Police officials said Thursday that people in Kurud village had been offering prayers to the statue for the last two days assuming it to be an idol of the Hindu goddess Parvati. A child in Haritika's hands was also wrongly identified as Lord Ganesha.
No arrests have been made, but police suspect the role of an inter-state gang, which stole the statue but then left it in the village when they couldn't cross the state's borders due to heightened security.
Chhattisgarh's borders had been sealed since last Thursday when the theft was reported.
Culture and Tourism Minister Brijmohan Agrawal, who expressed shock over the theft, said Thursday that he wanted to boost security in all famous religious sites to prevent any such incidents.
Haritika, who is said to have been converted to Buddhism by Lord Buddha himself, finds mention in various Buddhist texts. Archaeologists had recovered her statue in May this year and had described the find as a rare achievement.
The excavation team said that it was the first time that a full-size image of Haritika had been found in Asia.
The Chhattisgarh government had said last month that it would send a proposal to the central government to press for Sirpur's inclusion in the world heritage list.