Vladimir Putin took the oath of office for a fourth term in the Kremlin

Vladimir Putin was sworn in for a fourth term in a generous Kremlin ceremony as tensions with the West escalate, and internal discontent with poverty and inequality in wealth boils.

State television began its live coverage of the inauguration on Monday with Putin, 65, apparently hard at work in his Kremlin office. He then walked down a long, red-carpeted corridor to a black limousine that whisked him to the nearby Grand Kremlin Palace, the former throne room of Russia’s tsars.

Putin was applauded by about 5,000 guests as he entered the palace’s ornately decorated Andreyevsky Hall through colossal doors flanked by Kremlin guards. Among the guests were Gerhard Schröder, the former German chancellor, Steven Seagal, the former Hollywood action star who has become close to Russia’s political elite, and Alexander Zaldostanov, the leather-clad, tattooed leader of a pro-Putin motorcycle club.

With his hand on a gold-embossed copy of the Russian constitution, Putin swore to serve the Russian people faithfully. He also hailed Moscow’s ability to stand up for it interests in the international arena, and what he called Russia’s traditional values.

Despite the pomp, the ceremony was relatively low key compared with Putin’s return to the Kremlin in 2012, when his black motorcade sped through deserted streets that had been cleared of residents by heavy-handed security forces. A Kremlin banquet to mark the inauguration was reportedly scrapped over fears it would lead to public criticism.

Barring a change to the constitution, Putin’s fourth term is likely to be his last as president. He recently laughed off suggestions that he could return to the Kremlin in 2030, when he will be eligible to stand again. Government officials have not discussed the issue of his successor publicly, and analysts say the issue is taboo within the Kremlin walls.

Shortly after the inauguration, Putin put Dmitry Medvedev forward to continue as prime minister, a position he has held since 2012. Allegations of high-level corruption against Medvedev, 52, triggered large opposition protests last year, and 57% of Russians said they were dissatisfied with his work as prime minister in a recent opinion poll. Some analysts suggest Putin’s continued support for Medvedev is due to his usefulness as a scapegoat for economic failures.

Since his last inauguration six years ago, Putin has seized Crimea from Ukraine, triggering western economic sanctions, and ordered Russia’s military into Syria in support of President Bashar al-Assad.

Just weeks before his election victory in March, Putin presented what he said were Moscow’s invincible new nuclear weapons, his bellicose speech accompanied by an animated video that showed Russian warheads falling on Florida. Fyodor Lukyanov, a political analyst who sometimes advises the Kremlin, has described the current standoff with the west as a state of cold war.

Monday’s inauguration ceremony came just two days after Russian security forces assisted by Cossack fighters detained hundreds of people, including the opposition leader Alexei Navalny, at an anti-Putin protest in central Moscow. The EU condemned “police brutality and mass arrests”, and human rights figures demanded an investigation into why Cossacks had been allowed to attack opposition supporters, including with leather whips. Russian opposition media said on Sunday that Moscow city hall has paid a pro-Kremlin Cossack organisation almost £190,000 to ensure public order in the Russian capital.

Putin, who has ruled Russia for longer than anyone except Joseph Stalin, begins his new six-year term of office as an economic downturn has plunged millions of Russians into poverty.

About 20 million people, or 14% of the population, live below the poverty line, which is defined as an income of 9,828 roubles (£115) a month. Real incomes have fallen for a fourth year in a row, and about 3,000 schools, including in deepest Siberia, have no indoor toilets, according to government statistics. Wealth inequality is among the highest in the world, and corruption involving government contracts costs the country £26bn a year, according to the Moscow-based Gaidar Institute for Economic Policy.

In an opinion poll published by the Levada Centre on Monday, 45% of respondents said they blamed Putin for failing to reduce wealth inequality, and just over 30% said he had failed to increase pensions and salaries. Putin is reportedly preparing to tackle these concerns with an increase in spending on healthcare, education and infrastructure as part of a six-year plan worth 10tn roubles (£119bn).

Russia’s economic slump has also meant an increasingly vicious struggle for resources among the country’s government and security apparatus, analysts say. Alexei Ulyukayev, the country’s former economy minister, was jailed for eight years in December on corruption charges that were widely interpreted as a rare case of Kremlin infighting spilling out into the open.

The recent jailing of state security officials on corruption charges is also evidence of “intensified competition” for financial resources between officials at Russia’s interior ministry and the FSB intelligence agency, said Yekaterina Schulmann, a prominent political analyst.

Opposition figures, who accuse Putin of caring only about the economic interests of his friends and family members, reacted with scorn to the former KGB officer’s inauguration pledge to serve ordinary Russians. “Putin said Russians will live better, but he didn’t say which ones,” read a popular online joke.