From travelling across India for a few months (also among the "backwards" populations, as they are referred to even in Indian legal texts), I can tell you that yes, corruption is amazingly prevalent. As far as money exchanged, you might be right (I don't know), but the way it affects day to day life is nothing like in western countries. It's a credit to the resilience of people there that they can function on top of that structure and still be enthusiastic about "India" - over a dozen fairly geographically homogenous languages, with most people never travelling outside their cultural comfort zone.