Mr Gujral is the third prime minister to take power in Delhi since a hung parliament was voted in last spring. The 77-year-old former diplomat has a white goatee and resembles a beetle-browed Kentucky Colonel Sanders: stern but benign. After he took vows at the Presidential Palace, Mr Gujral promised "clean government" which would "root out corruption". But he did not refer to the Congress Party, whose abrupt withdrawal from the coalitionprecipitated this unexpected political crisis.
"Elections are costly but the price to be paid for instability and indecision is even greater," said Atal Bihari Vajpayee, lead-er of the Hindu nationalist Bharatiya Janata Party, who hold the most seats in Parliament and would gain the most if Mr Gujral founders. To block the rise of the Hindu right, Congress has agreed to support a revamp-ed United Front from outside.
Mr Gujral has a reputation for integrity and a long political track record. Although both his parents were ardent Congress Party workers and he himself was jailed in 1942 as a student leader of the Quit India movement, Mr Gujral resigned from the Congress Party shortly after the late Prime Minister Indira Gandhi declared a state of emergency from 1975 to 1977. Later, as a member of parliament for the populist Janata Dal, Mr Gujral served twice as foreign minister.
Born before partition in Jhelum, now across the border, Mr Gujral drew praise for his ability to bridge differences with neighbouring Pakistan. Insiders hope that the new Prime Minister's vaunted statesmanship can heal the rifts between unlikely political allies, now that Mr Gowda has been sacrificed for stability.
"He is not an opportunist and that's what makes me apprehensive of his ability to lead a bunch of unprincipled opportunists who have got together in what is called the United Front," said Mani Shankar Aiyar, a New Delhi political columnist.
The outgoing Finance Minster, P. Chidambaram, was clearly annoyed by Mr Gujral's selection - especially because his own regional party, the Tamil Maanila Congress, was briefly tipped as the favourite to take over the United Front coalition. The TMC have now deserted the 13-partner ruling coalition.
But Mr Gujral, who is expected to take on the portfolio of Finance Minister while retaining his old job as Foreign Minister, intends to push through the pro-market budget put forward by the ousted government, probably by end of this month. Such a move will signal stability and may encourage foreign investment in the region.
With the appointment of Mr Gujral, after two successive prime ministers from south India, the political power base has again shifted to the traditional cattle-rearing land of the north.