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NEW DELHI (Reuters) - Prime minister-elect Manmohan Singh will be sworn in on Friday at the head of a stronger, new coalition even though Dravida Munnetra Kazhagam (DMK) insisted it would not join the government over a row on cabinet positions.
Singh was expected to name veteran colleagues in his Congress party to positions such as finance and foreign affairs, suggesting a continuity from the previous administration at a time of slowing economic growth and mounting instability in Pakistan.
With a stronger mandate behind it in a general election, the Congress sought to project a firm stance, refusing to yield to regional parties demanding ministerial positions in the new cabinet.
The DMK insisted on Friday it would offer its 18 lawmakers only as outside support to the coalition after it was offered a smaller number of ministerial jobs.
"We will support the central government from outside," Times Now TV channel quoted DMK leader M. Karunanidhi as saying.
The Indian Express said the DMK had been offered six positions in the cabinet instead of the eight it wanted, and that there was also wrangling over the portfolios.
A soft-spoken economist, 76-year-old Singh will be sworn in by President Pratibha Patil around 6:30 p.m.
Foreign minister and party stalwart Pranab Mukherjee was the frontrunner for the finance minister's job, a post he held in the 1980s.
Mukherjee is seen as a stable hand with a history of pushing reforms, including signing up for a WTO agreement giving nations more access to global trade in 1994 when he was commerce minister.
Science and Technology Minister Kapil Sibal has been tipped by some media reports to assume Mukherjee's old job at the foreign ministry while the home minister, P. Chidambaram, who took over after the Mumbai attacks, will likely stay in his post.
"Blessed with a decisive mandate and largely free from rent-seekers, Manmohan Singh has far more leeway in choosing his next cabinet than he did his last," the Indian Express wrote.
Unfettered by their former leftist allies, Congress is also expected to push reforms such as raising the foreign investment limit in insurance and opening up the pension sector.
The Indian stockmarket surged earlier this week as investors welcomed Singh's strong mandate, which raised expectations for aggressive economic reforms at a time when growth in Asia's third largest economy has slowed to 6.5 percent.
"The election is seen by many as a game changer. India has a real chance of breaking out, attracting strong inflows and being positioned in investors' minds alongside China," the Business Standard said.
"The new government has the mandate, there is a huge opportunity to bring about structural change across sectors, and policy road map is also clear. We need the new government to deliver," the newspaper said.
Unlike the previous administration, the Congress-led coalition is assured of the support of more than 300 members of the lower house of parliament, well above the half-way mark of 272 required to rule.
Besides the slowdown, Singh's second term will face an array of challenges such as fraught relations with old rival Pakistan after the Mumbai attacks and a potential showdown with wealthier countries at the Doha world trade talks. (Additional reporting by Matthias Williams)