Ever since actress Shilpa Shetty was called a "dog" and "Shilpa Poppadom" and asked whether she lives in a shack on Britain's "Celebrity Big Brother" this month, commentators have been asking whether Indians are any less biased.

"I am one of the first people to say that Indians are the most racist people after China. We suck up to anybody who is white and has money, and look down upon those poorer and darker than us," said leading advertising consultant Prahlad Kakkar.

The humiliation heaped upon Shetty by her British housemates was front page news in India, and even overshadowed a visit by British finance minister Gordon Brown.

But the media and some commentators drew attention to Hinduism's ancient caste system, with the lower castes carrying out the least desired jobs such as cleaning and disposing of dead bodies.

Discrimination on caste grounds is now banned under the constitution. But the 160 million members of India's lower caste are among the country's poorest citizens and often suffer abuse.

Marriage adverts clearly spell out a preference for fairer-skinned women, and some observers have pointed to the pervasive stereotyping of south Indians, many of whom are darker, and of those from the country's mountainous northeast.

"People from the northeast are said to have chinky (Chinese) eyes and are routinely asked if they eat dogs," wrote journalist Jug Suraiya in the Times of India.

Many also pointed out that all Indians from the south are referred to as "Madrasis" -- for inhabitants of the southern city of Madras, now called Chennai -- even if they come from other southern parts of India.

"In some sense, Indians can be racist, but they are also some of the most tolerant people in the world," said Patricia Oberoi, professor of sociology at the Institute of Economic Growth.

"There is a great deal of separation on the basis of caste and religion, but there is also a lot of integration here," said Oberoi, an Australian by birth.

"Ignorance about other people is not restricted to this country by any means."

India's sensitivity over the issue was demonstrated when advertising firm Ogilvy and Mather recently faced flak for "racist" commercials.

The adverts, for a cricket channel during a cricket series between India and the West Indies, showed West Indian tourists having a hard time travelling in India. The punchline read: "It's being tough being a West Indian in India."

The television spots were seen to be a comment on the Indians' attitude towards dark-skinned people.

But the firm's executive chairman Piyush Pandey said context determined what was racist.

"If we call someone a Madrasi, then would it not be racist to call an Australian an Aussie," he said.