"Today we see Bollywood music being played in every household, mostly because they are easily accessible. I have nothing against Bollywood music as I really enjoy it. But in the process we are losing out on the other genres. It would be very tragic if we lost them, as a lot of it will never come back," Mudgal told in an interview.
The 53-year-old is trying to do her bit in popularising and preserving the wide variety of musical styles and genres through her festival "Baajaa Gaajaa" for the past three years.
She is now gearing up for the fourth edition, to be held in Pune Feb 10-12.
The festival will see as many as 100 artists from all genres of music like rock, blues, jazz, Hindustani vocal and instrumental music, Carnatic vocal and instrumental music, as well as folk music from different parts of the country, performing on stage.
"There's a huge variety in Indian music, whether old or adapted ones that highlight the diversity. We see a majority of Bollywood music played, but that doesn't represent the entire Indian music. There is so much to be shared. The whole idea behind the festival is to promote and propagate Indian music," she said.
The magical voice behind chartbusters like "Ali mora angana", "Ab ke saawan" and "Mann ke manjeere" is Mudgal's. But her presence in Bollywood has remained limited so far because she doesn't consider herself competent enough to keep up with contemporary songs.
"I've sung for Bollywood occasionally. But whatever I sing, it has to be something that I do justice to. I don't see myself singing the kind of songs that are being composed nowadays," she said.
"If I try something like this, I would fall flat on my face. I don't fit into the current crop," she said.
Mudgal has done playback in films like "Laaga Chunari Mein Daag", "Lajja" and "1920".
A lover of music genres such as khayal, thumri and dadra, Mudgal explored Indian pop music in the 1990s. Her albums "Ali More Angana", "Ab ke Sawan", "Pyaar Ke Geet" and "Mann Ki Manjeere" went on to become hugely popular.
While pop albums have seen a downfall in the Indian music industry lately, Mudgal said: "I don't agree that pop albums have lost their charm. Just like we have parallel cinema along with commercial cinema, there is alternative music industry that is producing, executing material of all kinds and has a vibrant collection of music.
"There are many people who are coming up with albums with their original songs and compositions," she added.
Honoured in 2000 with the Padma Shri, one of India's highest civilian honours, the singer says the music industry is poised for growth thanks to technology.
"Technology has powered the way artists distribute online. Although technology has provided a larger distribution channel, the independent avenues of publishing and distributing the product have marginalised and become more expensive," she added.