CNBC's Inside India newsletter: An education scandal years in the making

This report is from this week's CNBC's "Inside India" newsletter which brings you timely, insightful news and market commentary on the emerging powerhouse and the big businesses behind its meteoric rise. Like what you see? You can subscribe  here.

Cram schools are a well-known phenomenon in India.

Each year, thousands of aspiring students, mostly from middle-class families, move to Kota, a city in the desert state of Rajasthan, where they spend two years rote learning to pass competitive entrance tests to a handful of universities.

Yet, the system has also exacerbated the social divide between the haves and have-nots, who are confined to the largely abysmal state-run education system.

Competition is fierce in India, whether for jobs or admissions to elite institutions. For the millions entering the labor market each year, the government has been unable to develop policies that will create jobs fast enough to absorb them all.

That means entrance tests and examinations are a high-stakes juncture in a person's life. They open doors to dreams or often close them shut permanently.

So, many do whatever it takes — including cheating — to get ahead.

Last month, for instance, the government canceled the tests determining admissions into elite medical schools in India after reports of widespread cheating. The government said its cybercrime enforcement agency had indicated that the "integrity" of those "examinations may have been compromised."

The head of India's National Testing Agency, the body that conducts the medical entrance test, was sacked following protests by students and opposition political parties.

However, it wasn't an isolated incident.

In 2015, the Reuters news agency revealed that one out of every six of the country's 398