65-year-old Rawat was administered the oath of office by Governor Aziz Qureshi at Raj Bhawan lawns along with a 11-member Cabinet all of whom were ministers in the Bahuguna government.
Rawat's name was approved by Congress president Sonia Gandhi, senior party leader Janardhan Dwivedi told reporters here after a five-hour-long meeting of the Congress Legislature Party. Rawat was Union Cabinet Minister for Water Resources.
Bahuguna, who resigned on Friday, has drawn intense criticism for the way he handled last year's devastating floods and relief and rescue work.
In the 70-member assembly, Congress has 33 members and has the support of seven-member PDF including three BSP, one UKD and three Independent MLAs. BJP has 30 MLAs.
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The PDF, which has four ministers in the outgoing Bahuguna ministry, has pressed for additional ministerial berths in the new government.
Rawat pipped two other front runners for the top post -senior party leader Indira Hridayesh and member of Bahuguna's cabinet Pritam Singh.
Besides Dwivedi, senior Congress leaders Ambika Soni and Ghulam Nabi Azad attended the CLP meet as central observers.
Having the reputation of a hard-working leader, Rawat, MP from Haridwar, was made a Minister of State for Labour and Employment in 2009 and then MoS for Agriculture and Food Processing Industries. In July 2011, he was made MoS for Parliamentary Affairs.
He was elevated to the rank of a Cabinet Minister in 2012 in an apparent bid to placate him after Bahuguna was made the CM.