The answer is that we don't.
If we did have better functioning police systems, you would see a lot more growth in a lot of Indian cities. The biggest cities escape the tyranny of local powers simply because people living in these cities accumulate vast financial resources to essentially circumvent Government services (e.g. you will see private guards everywhere, gangs running protection rackets that try to ensure that "Justice" is served etc.).
This lack of basic government services and infrastructure can be crippling, especially to businesses and people looking to make long term investments.