I really doubt if that problem will ever be tackled. In cities it is a logistical problem. Standing in line for 5 minutes for a proper toilet v/s shitting on a track right away. There is no way on earth we can build sufficient number of toilets for the people in Mulund or Dharavi slums. There are politically incorrect solutions such as letting people defecate in open but provide slightly better facilities which will help tackle all the shit.
In village however the problem is purely cultural. I worked with some NGO which build proper flush toilets but people would prefer to use them as goat shelters. Their priorities are different.
Only in certain areas. In many villages a person can be beaten up for defecating in open and in some cities it would lead to arrest. Despite all the perception "toilets"has been a priority in many cities and especially villages. If you travel in rural Mahrashtra you will see large boards that say "Open Defecation Free Village", such places will even have vigilante groups to enforce this law.
It is a big health/hygiene problem. If you happen to be in fairly large train stations in India in the mornings, you can see cleaning staff spreading bleaching powder on the tracks to cover up the mess.