By Kenneth J. Cooper
Washington Post Foreign Service
Friday, March 20, 1998; Page A01

NEW DELHI, March 19—India today installed a new government dominated by Hindu nationalists committed to testing the secular creed that many believe has held this vast mosaic of a nation together throughout its half-century of existence.

The new government of Prime Minister Atal Bihari Vajpayee, unlike the one he led for two weeks in 1996, is likely to survive an initial vote of confidence next week and remain in power long enough to build a record in office. But Vajpayee and his fellow Hindu nationalists, whose accession to power was feared by India's huge Muslim minority, are constrained by a tenuous grip on power and have tried to signal a more moderate course.

The direction in which Vajpayee steers the new government could test the strength of the world's largest democracy, which was born in communal violence between Hindus and Muslims that claimed hundreds of thousands of lives in 1947. Although about 20 percent of India's 950 million people are not Hindu -- including more than 100 million Muslims -- Vajpayee's Bharatiya Janata Party (BJP) conceives of India as "one nation, one people and one culture," that of the Hindu majority.

"Deep down in the hearts of Muslims, I sense apprehension," said Ashgar Ali Engineer, an Islamic scholar in Bombay.

In the past, the BJP has taken a militant anti-Muslim stance. In 1992, party leaders stood and watched while Hindu fanatics razed a historic mosque in the city of Ayodhya, seeking to rebuild an ancient Hindu temple that had stood on the site before Muslim invaders tore it down centuries ago. The incident prompted communal violence that claimed 2,500 lives across the country.

But political circumstances seem certain to temper the BJP-led government's actions. Vajpayee has taken charge of a coalition government supported by more than a dozen smaller parties, and only one of those small parties shares a Hindu nationalist orientation. Moreover, the coalition does not control a majority of seats in Parliament's lower house. Even with the support of all its components, the 13-party coalition expects to survive a confidence vote scheduled for March 28 only by the grace of abstentions and vacant seats.

Since emerging from recent elections as the top vote-getter, the new ruling coalition has tried to extend its expected lifespan by moving toward the political center. The coalition agenda released Wednesday omitted Hindu nationalist issues that the BJP has previously emphasized and watered down its protectionist economic policies. BJP members sworn into the cabinet today with Vajpayee are divided between moderates and hard-liners.

Vajpayee, 71, also has promised to try to build consensus on controversial legislation. The senior lawmaker, who served as foreign minister of a coalition government in the late 1970s, will double as foreign minister in the new government.

The coalition sent a reassuring signal to international investors by naming another BJP moderate, Yashwant Sinha, as finance minister. Sinha was finance minister in a left-leaning coalition government for a year ending in 1991.

In a 1992 column in Business Today, an Indian magazine, Sinha opposed populist subsidies but argued that market-oriented changes in the nation's formerly socialist economy needed to win public acceptance if the government implementing them hoped to survive. "That is why I always insist that [economic] reforms must appear to succeed in the short term in order to endure in the long term," he concluded.

India's long-insular economy was not opened significantly to the outside world until a Congress-led government began pushing through reforms in 1991. In the ensuing years -- which have seen the United States become India's biggest trading partner and largest foreign investor -- significant restraint remains on foreign companies, and the BJP's rhetoric has favored self-reliance by curbing foreign investment in the consumer sector.

Four cabinet ministers have been prominent critics of foreign investment in India.

As industry minister in the late 1970s, George Fernandes, a socialist party leader, forced Coca-Cola and IBM out of the country. The companies did not return for more than a decade. In the last two weeks, local newspapers have quoted him as threatening similar curbs on foreign investment.

Fernandes was named defense minister in the Vajpayee government.

Menaka Gandhi, an independent whose mother-in-law was the late prime minister Indira Gandhi, has criticized the recent opening of American fast-food outlets in several cities. Ananth Kumar, a BJP member, opposed holding the 1996 Miss World pageant in the southern city of Bangalore because he said the beauty contest represented a "cultural invasion" from the West.

Kumar was named minister of civil aviation, an area in which the permissible level of foreign investment has been disputed. Gandhi, an environmentalist, has not yet been given a portfolio.

Former BJP president Murli Manohar Joshi, who was named human resource development minister, also has been critical of allowing foreign capital into the country.

Joshi is one of three BJP hard-liners in the new cabinet -- along with the party's current president, L.K. Advani, and Uma Bharati -- who were charged with inciting the 1992 Ayodhya riot. Advani was named home minister, putting him in charge of domestic security forces; as minister of human resource development, Joshi's responsibilities include overseeing education.

Several BJP members indicated the Human Resources Ministry would be important to the party because the Hindu nationalist brotherhood associated with the BJP, the National Volunteer Corps, runs about 12,000 schools nationwide.

At least six members of religious minorities also received cabinet berths: three Sikhs, two Muslims and one Christian.

Industry Minister Sikhander Bakht has been the BJP's most prominent Muslim, and Mukhtar Abbas Naqvi was the only Muslim BJP member elected to the lower house. Bakht sits in the upper house, where members are chosen by state legislatures. Naqvi's ministry has not yet been announced.