economics and democracy

Where most of the developed countries run democratic system and are at the same time, economically most successful, it is interesting to see why India lagged behind so much in last half a century while celebrating stable and largest people democracy in the world. The huge amount of corruption in public sector, utter lack of public disciplinary policies and systems, and tremendous amount of exploitation of human and other resources clearly indicate that economics and politics did not really go along well in last 5-6 decades. What would be the reasons?
It's a third major paradigm in the Indian society, the culture, which should play a major role as a catalyst, which seems to be ignored. Though India is probably the oldest and most populated democracy, it was never capitalistic in its social behaviour. Culture has played the biggest role in the civilization of the society. The influence of religion, philosophy and monarchical system has always had a upper hand in the society. In such a civilization, where 4-layered social structure(chaturvarnya) was adopted for over centuries, Brahmins were the most educated group of people and their level of education was primarily limited to religion, philosophy, maths, arts and some amount of science. The other group, Vaisya, who was primarily a group of business persons, also had only basic level of business knowledge. Several dynasties had social systems in place, but primarily more hierarchical and not democratic.
The problem appeared when India got independence and accepted democracy. Country and its people were not ready to invent systems, policies which could be governed and run by the people, but at the same time which would abide principles of modern economics. Especially in the beginning years of independence, leaders and beurocrats at the top level in government got trapped into economics at one end and socialist structure at the other. Policies which had tighter government control like license raj, less involvement of private sector, stricter import export policies, demotivated small and medium scale businesses, and extreme amount of red tap ism are indicative of such a confusion of these leaders at that time.
There are possibly 2 ways to approach. One is to try to educate people the principles of modern open economics in capitalistic terms, and its benefits and drawbacks, its responsibilities and flexibilities, and its importance to the existence of the society, similar to what developed western countries adopted. Other option is to somewhat rewrite economic principles and laws in terms of Indian context, considering the social patterns, level of people's education, and cultural set up.
In last 10 years or so, leaders have entered another level of confusion. They want to implement option one, but then don't seem to take efforts to educate people with capitalist approach. They still stick to socialist approach, in which case western principles of open economics wont exactly fit in.
Lets hope that astute and well educated leaders of today and tomorrow manage to conglomerate these two options together and be able to come up with some median way which would suit Indian situation the best.