The English language has shaped modern India's development in many ways, here are a few... First, it helped establish a link with the West in the post colonial era whereby ideas and information could be exchanged easily, especially in the realm of higher education . Subsequently this enabled members of successive generations to emigrate to developed English speaking nations as professionals thereby helping India establish a people to people link with the West which has come in very handy after the economic liberalization. Despite the inward and myopic outlook of less than stellar post- independence governments for decades on end and the political barriers of the cold war, India's fortunes changed radically in a very short period of time after it liberalized. This would not have been possible without the English language skills (as minimal as they might be) and the people to people link we mentioned. The fact of the matter is that possessing English skills as a young Indian today opens up a greater number of opportunities.
In regards to the stifling effects upon regional languages
Being proficient in one language doesn't necessarily mean that the other is any less important. The fact is that multi lingualism is very much possible as we see in Europe. In India however this problem exists because of a complicated inferiority complex (which I'm sure is heavily influenced by the colonial past) and the fact that the Indian society itself is extremely hierarchical in nature, where people constantly want to promote their social standing on the basis of caste, skin color, language, Western lifestyle or whatever else comes handy. This however has nothing to do with the English language itself. The second thing to remember is that English is the common language for science and technology which makes it inherently progressive thereby attracting the youth from less progressive cultures, but here again, parental guidance comes into play which can help bring about a balance.
Effects upon Social Lifestyle:
Despite all the aping, I don't think the Indian society has a good understanding of Western culture, nor has it actually absorbed Western attributes in significant measure. The imitation is limited to superficial and superfluous things fueled primarily by silly stereotyping; the two cultures however even now remain poles apart. It just so happens however that the West has become synonymous with modernity/ progress/ advancement and most of all- a higher standard of living. This is what most Indians seek to emulate (this is true for people from any other underdeveloped nation/society). Again, I don't think that English per se is responsible for this; rather it is the stagnation of the Indian society and the abysmal standard of living which has people running away. But as we see in the case of Japan and South Korea, this can be addressed.
From a purely linguistics aspect, I have always felt that the most important factor is language proficiency; what language you speak is almost irrelevant. Mastery of a language is highly correlative with reading and writing, and this in turn has a huge impact upon the intellectual development of a person, which at the end of the day is a ticket to productivity. Even in India, there are a fair share of intellectuals or even professionals graduating from high end universities like IIT, IIM, medical schools etc. who did their primary education in a regional language without suffering any setbacks. However in my experience, most of these individuals are highly proficient with their regional language. I have observed the same thing on a global scale in the USA. There are oodles of intellectuals, scientists successful professionals etc. who come here from all over the world for whom English isn't the first or the strongest language; but despite that, their intellect or productivity is never really in question. The reason I'm not too fond of casual Hinglish or the filmy lingo is because it seems to have become the primary language of communication, and this I fear may hinder the intellectual maturation process of many young Indians.
The advantages of knowing the English language far outweigh the disadvantages. There is no reason why Indian children cannot grow up to be multi lingual, provided they're confident about their identity.