I will start will a disclaimer first, the post is not applicable to the true-blood CEOs in the making that some b-schools produce.
In India as education by rote ensures your academic mobility (look at the percentage scores required to get admission into any stream of education and with only the academics as a barometer). Of course the entrance tests for engineering and medical ( medical is probably again a seperate case, because well... its a life saving profession, even though mistakes in other feilds are the one of the main causes for doctors to come in) could be shown as proof against 'rote', but a look at any of these exams (except to some extent IIT-which people who have got through think was way simple, for the rest its particle physics) will show that 'rote' rules. And you have a lot of engineering seats, not to mention the management quota, so that you never have a problem finding a seat.
Ok, to cut back, after your mundane degree you can then study further or pick a job. With IT jobs in plenty the adventurous or 'i dont know jack shit' kinds will go that way. Anyways after 2 yrs of cribbing about IT jobs, our guys are back at the doors of the b-school. I have met quite a few b-school aspirants and grads, and there are very few who know why they are there.hmm...dont ask me why i did it either. But through the rigours of the b-school everyone does become a survivor 'a bring it on mentality' which is partly developed already by an average indian s struggle to exist and this skill is just honed further. So all this finally culminates in the 'placement process' where the HR does not know anything about who they want, candidates have some vague idea of what they want with even vague ideas of what companies do the pay in the end becomes some sort of a differentiator.
The question is, is this system bad? Not necessarily, in the Indian context that refinement of the survival skills is just enough because people tend to figure out what they want in a few years time and hence you end up with excellent managers. Whats the downside? Management education does not produce enough quality research, you do not have best minds making a bee line to become professors and a distinctly unprofessional approach during the first 1-2 yrs of work.
Will this change? It has got to, simply because the 'knowledge' class competes with every one from the world. To put it in perspective, for a lot of present generation urban indians graduation and post graduation are a given. Not the same for western nations. The people who survive in the west are fiercely motivated. The chinese et all are are aliens :) they just work anyway ( for social mobility) and they can work hard. So if hasty career decision is made, it will just take that much time to unravel that mistake.