Surjit Bhalla, an Indian economist, has written to me that India's is "the most momentous election in world history". I disagree: the elections of Abraham Lincoln and Franklin Delano Roosevelt were more significant. But the idea is not absurd. India's population is 1.27 billion. Soon it will overtake China as the most populous country. If the election of Narendra Modi were to transform India, it would transform the world.
It is already possible to identify at least three ways in which the election is remarkable.
First, India has shown yet again the signal virtue of democracy: the peaceful transfer of legitimate power. That this is possible in such a vast, diverse and poor country is an inspiring political achievement.
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Second, Indians have rejected the dynastic politics of the Congress party, which, alas, brought to a sad end the distinguished public service of Manmohan Singh, a man I have known and admired for four decades. The most important Congress-led government since the days of Jawaharlal Nehru was that of Narasimha Rao in the early 1990s, under whom Mr Singh served as reforming finance minister. If Mr Modi succeeds, it will be because he builds on that foundation. Congress still has the best chance of being the strong secular party India needs, but only if it liberates itself from its dependence on the Gandhi family.
Third, Mr Modi truly is a self-made man. Even though his party won just 31 per cent of the vote, he has gained an overwhelming majority in the lower house. He has done so by promising to spread the perceived successes of Gujarat to the rest of the country. There is debate in India over whether Gujarat is the model it is alleged to be. Yet that is not the main point. What matters more is that Indians have chosen a man who promises to improve their lives. He is not chosen for his origins. That is testimony to India's transformation over the past quarter of a century.
The outgoing government is condemned as a failure. Yet, as Shankar Acharya, former chief economic adviser to the Indian government in the 1990s, points out, "economic growth has averaged 7.5 per cent a year, the fastest in any decade in Indian history. This rapid growth in gross domestic product has raised average income . . . by nearly 75 per cent in real, inflation-adjusted rupees." This sounds good. But, he adds, it also hides the truth.
Growth slowed sharply over the past three years "because of the cumulation of bad economic policies", while consumer price inflation has risen to between 9 and 11 per cent over the past five years. At the same time, Mr Acharya says, the government's policies became steadily worse. He points to exorbitant spending on subsidies for oil, food and fertilisers, wasteful entitlement programmes, exorbitant pay settlements and huge fiscal deficits. Other failures include the refusal to lift disincentives to employment, crony capitalism, capricious regulation, retrospective taxation, excessive jumps in food procurement prices and corruption.
Mr Acharya argues that all this has contributed to a daunting legacy: a failure to create jobs for the 10m young people entering the job market each year; stagnation in manufacturing; inadequate infrastructure; huge overhangs of incomplete projects; vulnerability of agriculture due to water stress; badly run entitlement programmes; the weakening of the country's external finances; and further deterioration in the quality of governance itself.
Mr Acharya is a sober analyst of Indian economic realities, who worked closely with Mr Singh in the 1990s. His damning assessment is persuasive. Yet India can surely do better. The latest estimates suggest that GDP per head is just a tenth that of the US, and half that of China. It must be possible for this country to catch up even faster.
Mr Modi has above all been elected to accelerate development. But if one recalls the failure of his Bharatiya Janata party's "India shining" campaign of a decade ago, he must do so in ways seen to benefit the vast majority of the population, not just its elites.
It is not clear whether Mr Modi can rise to such big challenges in this vast and complex country. His motto – "less government and more governance" – has caught the public mood. Yet it is not clear what this will mean in practice.
An analysis by JPMorgan suggests that in fact "there is a remarkable convergence of broad economic thinking" between the two main parties. The difference, if so, might be more in implementation, an area Mr Modi's supporters also stress. This suggests that the goods and services tax (a national value added tax) might be put into effect, investment projects might be accelerated, energy prices might be liberalized, shares in public enterprises might be sold – albeit without full privatization – and fiscal consolidation might be accelerated.
This would be to the good, but probably not enough to bring about the needed acceleration of growth and jobs generation. Vital further reforms would be in employment regulation, education and infrastructure, with a view to making India a base for labour-intensive manufacturing. With Chinese wages rising, this is a plausible ambition. Improvement in the administration of law is crucial. Agriculture needs big advances, including a more modern supply chain. The states need to be forced to compete with one another for people, capital and technology.
This election might prove to be a big step towards the economic modernisation of India that was relaunched in 1991. But this round of reforms will also be far harder than those were. It is not now just a matter of pulling the state out of the way. It is more about making the government an effective and honest servant of the Indian people. This challenge is possibly an order of magnitude more daunting than those Mr Modi once overcame in Gujarat.
Mr Modi remains an enigma. He is a man of action, a nationalist and a committed member of the Hindutva movement. It is hard to believe he would match Mr Singh's emollient reaction to Pakistan's promotion of terrorism. It is impossible to know what he might mean for India's communal relations. Nobody knows either how far he feels obliged to the business people who funded his campaign. But one thing is sure: India has a new game. Pay attention.