By Surojit Gupta
NEW DELHI, Nov 30 (Reuters) - India's economy will now be steered by the man who in 1991 protected it at its most vulnerable moment and then opened it up to the world -- Prime Minister Manmohan Singh.
Seen by analysts as an honest but weak leader during his time in the top job, Singh takes over the economy as well as his job as premier, perhaps only temporarily, after choosing finance minister Palaniappan Chidambaram to lead a Home Ministry under fire after last week's Mumbai attacks.
Singh, accustomed to the economy having served as finance minister and central bank governor in the past, takes charge just as the global financial crisis is expected to cut impressive growth averaging 9 percent in the last three years.
"He has great experience in economic management in various capacities," said D.K. Joshi, principal economist at domestic ratings agency Crisil. "This will help in overall economic management in the current scenario."
The three-day rampage by gunmen in the financial capital, Mumbai, and rising anger over a string of bomb attacks in other cities, forced the resignation of Home Minister Shivraj Patil, who has been attacked by his critics as ineffectual and aloof.
Singh had already started paying more attention to the economy as the global financial crisis made its presence felt on Asia's third-largest powerhouse, forcing key export markets into recession and freezing credit markets.
He appointed Duvvuri Subbarao, a former finance secretary, as the central bank governor and brought in Raghuram Rajan, a former IMF chief economist, as his adviser.
"I would like to assure each one of you that the government will take all necessary monetary and fiscal policy measures on the domestic front to protect our growth rates," Singh recently told top business leaders.
"On the international front, we are working closely with other countries to ensure coordinated policy action and increased development cooperation for the containment of this crisis."
HUMBLE BEGINNINGS
Born into a poor Sikh family in a part of British-ruled India now in Pakistan, Singh studied by candlelight to win scholarships to Cambridge and Oxford, earning a doctorate with a thesis on the role of exports and free trade in India's economy.
But he has never won an election and sits in the mostly nominated upper house of parliament.
He became prime minister by default, when Congress leader Sonia Gandhi turned down the job after leading the party to victory in 2004 elections, fearing her Italian ancestry would be used by Hindu-nationalist opponents to attack the government.
During his stint as finance minister from 1991 to 1996, Singh saved an economy facing a balance of payments crisis and unveiled far-reaching reforms which began opening insular India to the world.
As prime minister he has faced criticism for failing to push through more reforms, his government hobbled by opposition from communist allies opposed to greater liberalisation but whom Singh needed for a parliamentary majority.
Singh and his party finally stood up to the left over a nuclear energy deal with the United States, mending fences with a regional party, securing an alternative majority and winning a tense vote of confidence last July.
Now the government's chances of re-election at a general election that has to be held by May next year have been undermined by the attacks in Mumbai and the faltering economy.
Whether they have been fatally weakened may well depend on the performance of Singh and new Home Minister Chidambaram over the next few months. (Editing by Mark Williams)