Anti-corruption activist Arvind Kejriwal has vowed to end Delhi's "VIP culture" as he was sworn in as the Indian capital's chief minister.

The ceremony took place at an open ground, the Ramlila Maidan, in front of thousands of cheering supporters.

Kejriwal's Aam Aadmi Party (AAP) won 67 of 70 seats in the state assembly, trouncing both the mainstream parties.

The Bharatiya Janata Party (BJP), which won a landslide victory in last year's general election, was reduced to three seats. It was a major setback for Prime Minister Narendra Modi.

On the other hand, Congress, historically the biggest party in Delhi, was wiped out.

"I knew the people of Delhi love me, but I didn't know they love me so much," Kejriwal reportedly quipped at the ceremony.

During his inauguration speech, Kejriwal said he would end the "VIP culture" that privileges politicians above ordinary citizens - for instance, allowing them to bypass the gridlocked city traffic.

"In developed countries, even PMs wait at bus stands. Why can't the same happen here?" he said.

"We want to end the VIP culture in this country."

He pledged to make Delhi "India's first corruption-free state" in five years.

"If somebody asks for a bribe, don't say no. Just take your mobile out of your pocket and record it on your phone," he was quoted as saying by AFP news agency.

"You then come and give it to me. We will take the toughest action against the offenders."

He has promised to end corruption and lower electricity and water bills.

Kejriwal invited Prime Minister Narendra Modi to the ceremony but a spokesman for the chief minister-elect said Modi had turned down the invitation.

Kejriwal was sworn in as chief minister at the same place in 2013, although he resigned after 49 days after failing to pass an anti-corruption bill.

The AAP was born out of an anti-corruption movement that swept India three years ago.