They make it sound like some strict country such as Singapore or Dubai.   Let's face it, a high percentage of western youth may partake in the occasion marijuana smoke or drink of alcohol while traveling abroad on their gap year or time after university.  In most western countries soft drugs are DE-criminalized and not consider serious offences. The USA, Canada, Europe and Australia all have provisions for medical marijuana. Unfortunately India does not have these separate laws despite the high number of chronically ill people.
Not sure why a guide book would want to scare everyone like this (morality? ethics? ...doesn't sound like them.)

I can think of many time i've meet newbie backpacker people who imagine that if everyone is trying to do them in with some soft of drug set up.  Some time they are almost shaking, looking around if the Indian DEA is going to jump out from behind the water colder...there is no American or European style of drug war in India. Marijuana has been used in India for thousand of years long before European alcohol and tobacco from America arrived. The famous Bhang is written about in the Vedic texts - the drink of the gods.  Bhang is taken during festivals and even given to children. In my opinion it not a concern for local police as long as tourists are behaving themselves and acting respectfully.

So really the definition of possession is quiet broad, every type of drug has it's own classification as to what is considered possession.  The important part here is that they law is not all encompassing, it's not 10 years or nothing. I believe if it is single minor offence surely the 10,000Rs ($220) fine would apply. One could also claim to be an addict and seek treatment and thus remain free.

So in comparison to neighbouring countries such as Dubai, Thailand, Singapore or Malaysian actually India is quiet liberal. Indeed statistics show that entire towns in India may have predilection to flowers.

I'm not suggesting you should use drugs in India it is still illegal. Anymore than what might be deemed possession will send you away for along time. Like the English girl Daisy Angus