Forty years ago I worked on the Indian economy for the World Bank. Ever since, I have been fascinated by the place. The ability of this huge and poor nation to sustain a lively democracy has been among the world’s political wonders. Yet its economic performance has fallen short of what it might have been. Despite improvements in policy and performance since the crisis of 1991, this remains the case. Nevertheless, India is now the world’s fastest-growing large economy. What might it be in future?

It is with this question in my mind that I have visited Delhi in recent days. It is hard to judge what is happening in terms of immediate performance and policy. But four conclusions emerge. First, Prime Minister Narendra Modi’s Hindu nationalist Bharatiya Janata party government, in power since 2014, represents continuity rather than the pro-market transformation many supporters naively expected. Second, short-term performance and prospects appear favourable relative both to the immediate past and to what is happening almost everywhere else. Third, medium-term performance should also be decent, provided the government implements the reforms it has already outlined. This is partly because India retains so much potential. Yet, fourth, it also faces risks, external and internal. Success must not be taken for granted.

Consider, then, the character of the government. It is centralised in the office of the prime minister. Its orientation is more towards management than to markets, and more towards projects than to policies. It has shown no inclination towards radical privatisation or restructuring of inefficient public monopolies. It continues to spend large sums on inefficient subsidies. To be fair, the upper house, which the government does not control, has so far blocked legislation where the government wishes to do the right thing. A salient example is the services tax — a national value added tax that would accelerate integration of India’s internal market.