Indian security chief resigns over Mumbai attacks

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By Rina Chandran

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

New Delhi said it was raising security to a "war level" and had proof of a Pakistani link to the attacks, which unleashed anger at home over the intelligence failure and delayed response to frenzied violence that paralysed India's financial capital.

Officials in Islamabad have warned that 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 elections on Delhi on Saturday and national polls due by May.

Federal Home Minister Shivraj Patil submitted his resignation, India's ruling Congress party coalition said on Sunday. Finance Minister Palaniappan Chidambaram was appointed to take over Patil's job and Prime Minister Manmohan Singh will take over the finance portfolio for now, the government said.

Indian TV reported that National Security Adviser M.K. Narayanan had also resigned.

Indian officials have said most, if not all, of the 10 Islamist attackers who held Mumbai hostage with frenzied attacks using assault rifles and grenades came from Pakistan.

The tension has raised the prospect of a breakdown of peace efforts going on since 2004. The two nations have fought three wars since 1947, when Muslim Pakistan was carved out of Hindu-majority India.

They went to the brink of a fourth conflict after a 2001 militant attack on the Indian parliament which New Delhi also blamed on Pakistan.

"We will increase security and strengthen it at a war level like we have never done it before," Sriprakash Jaiswal, India's minister of state for home affairs, told Reuters on Sunday.

An official in Islamabad said the next one to two days would be crucial for the nuclear-armed neighbours' relations. Pakistan has condemned the assaults and denied any involvement by state agencies.

Pakistani Prime Minister Yousaf Raza Gilani telephoned opposition politicians late on Saturday to brief them on the crisis and garner support.

"These political leaders assured the prime minister of their full support and cooperation at this critical juncture," Gilani's office said.

Pakistani President Asif Ali Zardari has said he would act swiftly on any evidence of Pakistani involvement.

MOPPING THE BLOOD

The three-day rampage and siege in Mumbai turned India's financial and entertainment hub into a televised war zone.

On Sunday morning, the smell of disinfectant was strong outside Cafe Leopold, and the sidewalk wet from mopping -- a different sight from Wednesday night, when blood-splattered shoes and napkins lay strewn among broken furniture and glass.

"We've cleaned up, put everything in order," said Farhang Jehani, who owns and runs the cafe with his brother.

It opened briefly before police came and shut it down again, saying investigations needed to be completed first.

Elsewhere in the trendy Colaba district where the fighting took place, shops were open and traffic flowed despite police barricades and heavy clean-up work around the Taj Mahal hotel, a 105-year-old landmark and the site of the longest siege.

Broken windows were boarded up and firemen used a hydraulic crane to reach the sixth floor, gutted by a fire set by the militants as they fought dozens of commandos in the labyrinthine hotel. Some of its passages didn't appear on the hotel's plans, slowing the military operations.

Elite Black Cat commandos killed the last of the gunmen on Saturday after three days of room-to-room battling inside the Taj, one of several landmarks struck in coordinated attacks on Wednesday night.

Hundreds of people, many of them Westerners, were trapped or taken hostage as the gunmen hurled grenades and fired indiscriminately. At least 22 of those killed were foreigners, including businessmen and tourists.

Nine gunmen and 20 police and soldiers were also killed. A tenth militant was caught alive.

On Saturday, India's navy and coast guard boosted coastal patrols, after evidence mounted that the attackers had come by boat to Mumbai from Karachi, Pakistan's main port.

India's Home Ministry said the official toll in Mumbai was 183 killed. Earlier, Mumbai disaster authorities said at least 195 people had been killed and 295 wounded.

The attacks struck at the heart of Mumbai, the engine of an economic boom that has made India a favourite emerging market.

The city of 18 million is also home to the "Bollywood" film industry, the epitome of glamour in a country blighted by poverty.

(Reporting by New Delhi, Mumbai and Islamabad bureaux; Writing by Bryson Hull; Editing by John Chalmers)

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