Every country has urban and rural areas. So maybe nebula has seen only the slums :P and not seen places like Bangalore or Pune or elsewhere.
Anyway, OLPC-India targets govt schools. And if given to the state of Kerala, I would fully support it. Kerala is the state with the highest literacy rate (sometime back I heard it's 98%. so their state govt seem to be efficient in the area of education). There are govts that are corrupt. And I guess some of those OLPCs will go to corrupt bureaucrat's kids. But still a part of it would reach those for whom it was bought - the govt school kids. Many schools don't have blackboards? The situation won't get worse anyway. Think of it as money being used for a purpose rather than going to another bureaucrat's pocket in lump some.
P.S: Even if one of those who got an OLPC, gets bitten by the geek-bug / entrepreneur-bug. Turns out to do something for his locality/surrounding sometime later. I would say the OLPC has done it's job :)
[full disclosure: I'm from Bangalore]