The thing is our politicians are crackpots when it comes to technology (infact, in most of the areas where they can't "earn" their share). The leading whiner, Kapil Sibal, claims that the content on web may hurt communal feelings. But, most of the people who are backward enough to getting hurt by such content don't use web at all. Those who use are tech-savvy enough to ignore such contents.
One reason behind this step was that contents abusing the politicians of the ruling party (mainly, the party head Sonia Gandhi) arose in the social networking sites and search engines. So, the most logical solution for these guys is to block the content. Of course, we Indians know that it is totally retarded.
And India is a democratic nation for a reason. If people think what the government is doing is wrong, they won't let that happen. Indian citizens rallied against government in mid-2011 to stop it from introducing a crippled anti-corruption law.
I am confident that the sites won't be censored in India, not until there is democracy. The current government has anyways done enough harm to the country so as not to get elected again.