Atanu!
Great to see your blog on one another facourite topic of Mine: Democarcy vs Economic systems!!! And thank god, I have access to posting comments, which was blocked earlier in my company! :D

And about the topic, yes India is a "flawed democracy" [even Democracy indices prepared by many organisations say so!!] where the govt still appoints judges, has quotas, kickbacks, has a lot of say on what an individual does [for eg. restrictions on an individuals and licences one has to obtain etc] and even China has a better economic climate vis-a-vis India!

I was of the opinion that, ideally, democracy goes hand-in-hand with free markets and end up making the state a prosperous one. But, with 60 years of our experiments with democracy, and 15 years of (limited) free markets, I am surprised, we still have corrupt netas and babus getting elected and continuing with their corruption!

I think it has got to do with corruption and illiteracy as you have pointed out.

I keep saying this - Illiterate democracy + Corrupt Socialism = Third world country India!!