The contract between the state and its citizens is one that is primarily punitive in India. It promotes (and thrives) on fear and attempts to use that fear towards getting people to comply.
Consequently, the average citizen is not invested in helping the state prosper as there is no correlation between the well-being of the state and its citizens. The well-being of the state is considered just an unavoidable cost of living in the country.
A state that is not in the service of its citizens has its citizens preferring to avoid any contact with it (police, courts, offices), if they can help it. The exceptions to this are few. Nearly all interactions are driven from desperation; or are interactions led by the state.
What makes it worse is that the state does not incentivize good behavior. As a bad person, as long as you don’t get caught, you are much better off than the people who behave well. Meanwhile, doing the straight and narrow does not get you anything better than the ones who don’t do the same. In a lot of cases it gets you far less than the ones who don’t go by the book.
This, in turn, incentivizes people towards cutting corners and finding workarounds; turning a whole lot of the population into reluctant crooks. Income tax is a major example of this as for those who pay their taxes honestly, there is an increased risk of scrutiny. On the other hand, the risk:reward ratio makes it worth it for the privileged as the rewards are much higher for them than the less-privileged to dodge taxes.
Incentivizing good behavior is not an approach without its flaws. Every system will be gamed, especially in a country like India. But a gamed system that doesn’t benefit the deserving is far more flawed, compared to a system that benefits the vast majority of people who do the right thing while some still game the system.
If India has to stand any chance to transform itself into a developed country the contract between the government and its citizens has to change. The citizens need to stop fearing the state and know that the state has their welfare as the most important thing.
Anything else — war-on-corruption, cashless economy, poverty alleviation etc. — are small ideas that doesn’t address the core issue. They are just nice themes to rally around, while the rot at the core remains the same.