I am an Indian, and I have some news that I thought /. folks would already know, but somehow don't really pick up on. The salaries in India for folks at the top end of the market are equal or higher (after taxes) to the salaries you get paid as an Indian on a green card, and way higher than you get on an H1-B. In the last 6 or seven years, nearly all my friends who I consider top of the game in their respective fields; software, hardware R&D, banking, management consulting and senior corporate management; have all moved back to India.
For the salary that gets them a tiny flat in a crime ridden suburb of Jersey or LA, they can get a house, two cars with drivers, 3 servants; and get to stay near the kids grandparents so they can actually go out if they want to. Many of these people are US citizens already, or green card holders. Many folks actually let their green cards lapse because they are so sure they are not coming back.
The main reason Indians move out are today are 1) they can't beat the system in India and move up high enough or 2) they are so fed up of politics and bad infrastructure that they want to get away. The US is NOT the most common destination for these folks. People who want to emigrate for good have been moving to Canada, New Zeland and the Far East. Many moved to Dubai and other Middle East countries now that you can stay there for life. It's only a percentage of techies and senior management types who did move here to do their post grad work or earn MBA's. With the cost of college tuition going up, and chance of scholarships going down, that percentage is going to drop.
There are still 65,000 people apply for H1-B VISA's every year, I do agree. Out of a population of 1 billion, that's not a high percentage. Also, if you've spent the last 3 years slogging it out to finish college, you are out of the loop back in India, and the thought of competing with the huge numbers back home can be scary. So they put in an H1-B petition so they can avoid the competition. A backdoor start if you will. A very large percentage of these really don't want to live here for the rest of their lives (nor will be allowed to by their parents)
On a related note - I do agree with most posters here that a vast majority of Indian programmers who you get to work with suck. On behalf of my fellow Indians, I apologize for foisting these bozos on you. But you were suckers enough to pay for them and - Caveat Emptor and all that. You should really have been paying more attention during the interviews. There are some great programmers out there - and I consider myself one of them. When you buy in bulk, you are going to get some rotten fruit with the good stuff. Spend a little more time and shop around - and you can cherry pick the best. If you did not do that, or get your organization to do that - you will, unfortunately get ripped off. I, for one, always tip over the strawberry boxes to look at the bottom row that's hidden under the juicy ones. If you find a shop that never has ones with fungus and frost damage in the bottom row, let me know.