I want to nitpick slightly, if I may, albeit the point is not related to the general discussion of poverty in India.
There is also some modern, relevant benefits to identifying someone's caste: it is an indicator that someone comes from a similar cultural or religious upbringing. That you speak similar dialects of Hindi. This is important when, say, marrying.
This says nothing of the caste system as institutional discrimination, but it's worth mentioning that caste is not "purely" an economic/political bit of culture.
Yes, caste system is embedded in the culture. It is not purely economic/political in nature. It is used by politicians because it is there, socially. This form is racism exists so deep in India. You can witness this:
There is whole sect in India which is segregated, tortured everyday for being born as a lower caste and it does not even end with their death. They have to clean others' feces by their hands (yes even today) and this is considered a norm. Rich, higher caste still instill this in their own kids to be wary of the "dirty people". Kids born into Dalit families are reminded of this by not letting them eat with other kids, not letting them wear same clothes and being asked for their caste again and again. This system is kept alive.
This all still exists and is in abundance. Point to note is that this is not just in rural, uneducated parts of India. Honestly, the concept comes from Hinduism. As a major religion for centuries, it has a code-of-conduct by Manu to divide the society into 4 major parts. But now it is a part of every sect in practice.
It's going to be hard for the caste system to stay rigid because in larger cities there is no way of verifying any of this. In bigger cities like Mumbai, it's already pretty apparent with most kids growing up indifferent to the complex caste adherence of the past. Most of these kids would not be able to attribute a caste to people based on their last names as that knowledge has been lost. Going with the theme of this thread, this is definitely not true across the board but definitely applies to the large majority, at least in major towns and cities.
British found solution to the caste menace and promptly gave independence to Christians/Anglo-Indians/Sikh/SC/ST communities in 4th August 1932 Round Table Conference.
https://en.wikipedia.org/wiki/Communal_Award
Caste is the most insidious poison to ever walk the face of the planet, far worse than all the wars, disease, famine and genocide committed, because the people on the right side of caste find ways to justify it.
Belief in karma and reincarnation has got nothing to do with it. And even the victims of this system know this.