Grief, anger as India reckons

By Rina Chandran

MUMBAI (Reuters) - The fallout from a three-day rampage that killed nearly 200 people in Mumbai threatened on Sunday to unravel India's improving ties with Pakistan and prompted the resignation of India's security minister.

New Delhi said it was raising security to a "war level" and had no doubt of a Pakistani link to the attacks, which unleashed anger at home over the intelligence failure and the delayed response to the violence that paralysed India's financial capital.

Officials in Islamabad have warned any escalation would force it to divert troops to the Indian border and away from a U.S.-led anti-militant campaign on the Afghan frontier.

Newspaper commentaries blasted politicians for failing to prevent the attacks and for taking advantage of its fallout before voting in Delhi on Saturday and national polls due by May.

Indian Prime Minister Manmohan Singh said he would boost and overhaul the nation's counterterrorism capabilities, an announcement which came after Federal Home Minister Shivraj Patil resigned over the attacks.

"We share the hurt of the people and their sense of anger and outrage," Singh said. "Several measures are already in place ... But clearly much more needs to be done and we are determined to take all necessary measures to overhaul the system," he said.

Air and sea security would be increased, and India's main counter-terrorist National Security Guard would be increased in size and given more regional bases, he said in a statement.

Singh also named Finance Minister Palaniappan Chidambaram -- much derided as finance minister but respected for his work overhauling India's security agencies as a junior minister in the 1990s -- to take over Patil's job.