[microarchitect]

transferred back to Indian universities by returnees who start academic careers?

Of course, they are. I went to a top-tier school in India for my masters degree and I'm now a graduate student at a well-known private university in the US. I would say there is very little difference in the quality of teaching between my Indian alma mater and my current university. The main advantage here seems to be an army of teaching assistants conducting office hours, "precepts" and such which probably help struggling students. But I think the in-class lectures, homework assignments and exams are of the same quality.

I also went to a second-tier private school for my undergraduate degree and that is where I experienced the sort of teaching the article talks about. I think, like most of India's other problems, it boils down to economics. I paid about about $1200 in total for my four year undergraduate degree. I believe the government supplemented some of this with a grant to private institutions for students who met a merit criterion. But my point is that this is very little money and you can see why it would be quite difficult to recruit and retain high quality teaching talent.

The top-tier institutions - the IITs, IISc, IISERs, ISI and so on - don't have great salaries but they make up for it with prestige, perks (on-campus housing, cheap food, discretionary financial awards) and research grants. But beyond the cream of the crop, unfortunately it isn't a rational economic decision to go into teaching in India. This isn't to say nobody does and I've had a few really great teachers even at my undergraduate school but I also realize that India is a poor country with no social safety net. I'm not going to judge anybody for choosing financial security over social service.

[RestlessMind]

This. The main problem at Indian undergrad institutions is lack of good teachers. And that is because of poor pay. I went to a top colleges at one of the decent universities (a step below IIT / REC). I had exactly one great teacher who was passionate about his subjects. 10-15% were decent. But most of them were a joke. And my friends at other colleges under this university, too, had similar experiences.

Apart from good pay, another reason for having poor teachers is reservation / quota for teaching positions. So even if someone doesn't deserve to be teaching, one would be doing so just because of his/her caste.