Outgoing Manmohan Singh warns against Narendra Modi as India's next PM

India's prime minister, Manmohan Singh, has said he would step aside after 10 years in office, paving the way for Rahul Gandhi to take the reins if his party stays in power following this year's scheduled elections.

In only his third news conference in a decade, Singh said that Gandhi – the 43-year-old heir to India's Nehru-Gandhi political dynasty – has the best credentials to become the next head of Congress and prime minister. Singh is 81 and was not expected to seek another term.

"I have ruled myself out as a prime ministerial candidate," Singh said. "Rahul Gandhi has outstanding credentials … I do hope the party will take the right decision at the appropriate time."

Friday's news conference comes at a time when the Congress party's stock is low, battered by corruption scandals, internal feuding, and an inability to deal with a stumbling economy and deep-rooted problems with poverty, infrastructure and education.

The opposition Bharatiya Janata party, led by Narendra Modi, has the momentum ahead of the May election, after trouncing Congress in recent state elections. The vote was seen as a gauge of voter sentiment in this secular democracy of 1.2 billion people.

Modi, chief minister of Gujarat for the past 11 years, is credited with turning his western state into an industrial haven. But critics question whether the Hindu nationalist chief can be a truly secular leader over India's many cultures.

Modi has been accused of doing little to stop anti-Muslim riots in the state in 2002, which left more than 1,000 dead.

"Without discussing the merits of Modi, it would be disastrous for the country to have Narendra Modi as the next prime minister," Singh said.

Asked about BJP claims that he was a weak prime minister, Singh responded: "If by a strong prime minister they mean you preside over the massacre of innocent citizens on the streets of Ahmedabad, if that is the measure of strength, I do not believe that is the sort of strength this country needs, least of all from its prime minister." Ahmedabad is the commercial centre of Gujarat.

Modi has denied any role in the violence and he says he has no responsibility for the killings. Last month, he said he was shaken to the core by the violence and his government responded to it swiftly and decisively.

Singh, a technocrat, was chosen to fill the prime minister's seat in 2004 by Sonia Gandhi, the widow of the assassinated prime minister Rajiv Gandhi.

Singh has been widely seen as a regent, keeping the seat warm until Rahul Gandhi was ready to take what some see as his birthright. Singh also addressed the recent diplomatic furore between India and the US, touched off by the arrest and strip-search in New York of an Indian diplomat accused of underpaying her Indian maid.

Singh said relations with the US are a top priority. "Recently there have been some hiccups," he said. "But I believe these are temporary aberrations. Diplomacy must be given a chance to resolve these differences."