This article by Raghuram Rajan seems to explain some of India's problems. Excerpt:
"In sum, even in a society where political institutions ensure that citizens' preferences matter, initial inequalities (in education and wealth) may be self-perpetuating. Citizens, fearing that the advantage gained by one group may come at the expense of the meager rents of the other, become like crabs in a bucket, preventing each other from getting out. Uncertainty about who will get the benefits of reforms can further compound resistance. Underdevelopment can persist with the full connivance of the exploited, even with reasonably well-functioning political institutions. Finally, while stylized, the example is consistent with the evidence that far too many poor economies, like India, have underemphasized universal education while overemphasizing higher education and that the poor and uneducated in a number of countries in Latin America have turned against (partial) economic liberalization because they see few of the new opportunities while bearing additional costs."