* Protests by Jat caste had paralysed Haryana state

* Death toll rises to at least 16

* Army regains control of key Delhi water source

* Modi ignores protests, criticises unnamed "conspirators"

Days of rioting and looting across Haryana by the Jat community had challenged Prime Minister Narendra Modi's promise of better days for Indians who elected him in 2014 with the largest majority in three decades.

A Jat leader said protesters had reached a deal with state and federal leaders to end their mobilisation, in which 16 people have been killed and more than 150 injured.

"The government has promised to meet our demands and we have promised our full cooperation," Ramesh Dalal, convener of the Jat Arakshan Andolan (Jat Reservation Movement), told Reuters.

Thousands of troops were deployed to quell the protests, which had flared again on Monday near Sonipat when a freight train was torched. In neighbouring Rajasthan, Jats attacked and burned buses.

Disruption has been huge, with 850 trains cancelled, 500 factories closed and business losses estimated at as much as $5bn by one regional lobby group.

Dalal said he had appealed to the entire Jat community, which makes up a quarter of the population of Haryana, to return home. A senior officer said state police still faced a challenge to maintain law and order.

The army earlier on Monday retook control of a canal that supplies three-fifths of the capital's water. Delhi's chief minister, Arvind Kejriwal, said the army had reopened the sluice gates of the Munak canal to the north of the city. Water was expected to reach the metropolis by early Tuesday.

Order slowly returns

The Haryana government put the death toll at 16 while police said earlier that there were tensions in some towns as Jats tried to prevent other communities from reopening their shops.

In Bahadurgarh, to the west of Delhi, Jat protesters turned out in force during the day to express their anger against Modi and demand written assurances of more jobs for their community.

Many Jats, who number more than 80mn across north India, are farmers whose livelihoods have suffered as families divide farms among their children. Two years of drought have harmed crops, and they are also missing out on urban jobs.

Their demands for government jobs and student places are based on affirmative action policies that are typically reserved for deprived groups.

Ramcharan Dekhara, a 52-year-old father of four, has sold his land to pay for his daughter's marriage and now runs a tea shop near National Highway 10.

"I am fighting for my sons' future. The boys are sitting at home and there is nothing they can do at the tea shop," Dekhara told Reuters. "They studied hard to make a new life but now they are wasting time and watching TV all day."

The Supreme Court has previously struck down an attempt to classify the Jats as an Other Backward Caste, or OBC, which would formally entitle them to a quota of jobs and student places.

"There is a constitutional barrier in giving Jats OBC status but we will find a way to fulfil their demands," junior agriculture minister Sanjeev Balyan told Reuters.

The Jats predominantly voted for Modi's Bharatiya Janata Party in the 2014 general election, when he won the biggest parliamentary majority in three decades. Months later the BJP won an outright majority in Haryana for the first time.

Although many of the state's chief ministers have been Jats, the current minister is not. Commentators have faulted him and other BJP leaders for failing to read the social mood and devoting too much attention to issues like cow protection that are a core part of the party's pro-Hindu agenda.

In a familiar pattern, Modi completely ignored the protests, instead launching a broadside on Sunday against unnamed conspirators he accused of trying to undermine his government.

"They are now hatching conspiracies every day to finish and defame me," he told farmers in a speech in Odisha.