Some of the observations above may be true, but I won’t take them at face value…I have too much respect for the Indian people to accept that they are a corrupt or inept bunch…all 1B of them.
Be that as it may, the truth is much more likely to be that the exams are generated to be normed to an advancing and ever-changing population. I don’t know how well they do that, but if they do, the exams are meant to predict learning ability, and there will be a cut-off score. The score is pass-fail for all but a handful of jobs where competition is exceedingly keen and only the higest achievers will be screened thereafter. So, if you meet or exceed the cut-off score, your application continues in the processing. For some jobs, the cut-off may be even higher, and then those scores are normed so that the few who pass the cut-off are themselves placed on a distribution where their results are labeled, “Substantially below average”, "Below average, “Average”, “Above Average”, and “Superior”.
A general classification test, or aptitude test, which is surely what this test is, will give a good indication of both prior learning and learning ability. When you only have so many openings, so many classes to run with so many positions, and so many instructors available, you pick the best candidates, and those are likely to be those with proven records of high achievement in many things, not the least of which would be in a formal education setting, and also those who will likely learn all they must master in the short time they can be exposed to it.
So, yes, it would be a primary screening instrument. If it is designed properly, with all quesitions put through a proper item analysis, including statistical validation, and normed to the expected applicant population, it is sure to be an ethical instrument.
I don’t know why it would be convenient to suppose otherwise.