* Finance, interior, defence, foreign, trade ministers stay
* Ramesh moved to rural development ministry from
* Changes seen as cosmetic, no quickening of reforms
* Singh says last reshuffle before 2014 elections - media
(Adds PM comment, minister resignation in paragraphs 9, 10)
By C.J. Kuncheria and Paul de Bendern
NEW DELHI, July 12 Indian Prime Minister
Manmohan Singh retained key allies in a cabinet reshuffle on
Tuesday, shunning big changes in a bid to hold onto power amid
charges of graft and policy paralysis.
In his second cabinet revamp this year, the beleaguered
prime minister shied away from his pledge of a major shakeup,
choosing instead to focus on gaining rural support ahead of 2012
He retained his influential but often troublesome finance
and interior ministers, a sign that stalled economic and
political reforms were unlikely to be fast-tracked soon.
Tweaks to the government were seen as an attempt to remove
some underperforming ministers and prepare the ruling Congress
party for a key election in Uttar Pradesh next year, India's
largest state with some 200 million people, a vote seen as
setting the stage for a national election in 2014.
"I don't think it is a big-ticket change. I mean there have
been some changes at the margin. It could be that part of this
exercise is with an eye on the U.P. elections," said Sonal
Verma, a Mumbai-based economist at Nomura, who still expected
some economic reforms in the near-term.
The Congress party-led government has repeatedly promised
new policies, including opening the retail sector to foreign
investment, simplifying the taxation structure and land
Singh did recently cut fuel subsidies, a sign that the
government can push difficult decisions it if so wishes.
Bond and stock markets in Mumbai did not react to the
reshuffle as those ministers who handle one of the world's
fastest growing emerging markets were kept in their posts.
Singh was quoted by local media as saying that this would be
the last reshuffle before the national election in 2014.
But hours after the swearing-in ceremony, Gurudas Kamat, a
newly appointed cabinet minister in charge of drinking water and
sanitaion, resigned. Media reports said he was asked to quit
after voicing disappointment over his new portfolio.
MAVERICK MOVED ON
In one surprise appointment, the maverick Jairam Ramesh was
moved to the rural development ministry from environment, a
change expected to be welcomed by business.
As environment minister Ramesh held up multi-billion-dollar
investments into the steel, infrastructure, mining and power
sectors by strictly enforcing green laws, displeasing big
business and worrying investors.
Ramesh is believed to be close to Congress president Sonia
Gandhi, the power behind the government, but has had differences
with the prime minister.
The rural development ministry, which looks after an
expensive job guarantee scheme popular with the poor, is central
to the ruling party's strategy to keep its rural voter base.
Singh is likely to face a hostile monsoon session in
parliament from Aug. 1 when opposition parties are expected to
press the government on corruption and inflation, currently the
highest in any major Asian economy.
Voter discontent in India has steadily grown after one
corruption scandal after another have embroiled the government.
The former telecoms minister is under arrest over accusations of
taking bribes in a scandal that may have cost the state $39
billion in lost revenues.
Left-of-centre Congress has traditionally relied on the
rural poor for votes and the tweaks in the cabinet suggest
Gandhi wants to ensure the recent scandals, coupled with soaring
inflation will not lead to a loss of support in coming years.
(Additional reporting by Abhijit Neogy in New Delhi; Editing by
Daniel Magnowski and Yoko Nishikawa)