India is an actual democracy (edit: should have said semi-capitalist or mixed economy, sorry), not a socialist state, mind you. The trouble here is bureaucracy and mismanagement. The government is trying to prop up farmers, but this comes at the expense of millions of its citizens. (Note that most other governments aren't anywhere as dysfunctional, in case you were thinking of blaming 'big government'.)
The Indian government is known to have very serious problems with mismanagement and corruption (worse than many other Asian countries). Witness what was practically the giving away of the communications spectrum to private companies a few years ago, due to sheer ignorance on the part of the minister responsible. India's government needs to be reformed quite fundamentally.
Isn't it pretty much a capitalist economy? I was under the impression most of its wealth was in private hands. It was socialist over 2 decades ago, but the tide has mostly shifted towards capitalism, and growth has been fast.
Nonetheless, the enduring problems of corruption and mismanagement in its administration remain. Those can't be attributed to the old socialism or current capitalism alone, considering that India is going through a rapid economic rise out of relative poverty. Bad governance is bad governance, whatever the system, and it's aggravated when countries are poor, have a weak rule of law, and are just starting the climb up the ladder of development.
Sort of, there's a big sliding scale between free markets and socialism. Hong Kong is less socialist than Denmark, is less socialist than America, is less socialist than France, is less socialist China, is less socialist than India, is less socialist than Cuba, is less socialist than North Korea.
India has a few sectors, like IT, that are fairly unregulated and which are growing very quickly but the vast bulk of the economy isn't like that.
I certainly agree that good government is very important, though. The better the government the less government intervention in the economy hurts growth, and the more it tends to actually help disadvantaged people.
> Socialism is an economic system; democracy is a system of governance.
Except throughout the Cold War, the socialist states looked more like other socialist states (to wit: The USSR, the PRC, clients thereof, and non-aligned socialist states like Albania) than like non-socialist states around them. These states often called themselves "People's Republics".
Of course, if you take that definition of 'socialist', then India most certainly isn't socialist.
My point: Language isn't simple. Politics isn't simple. Mixing the two simplifies neither.