How is this still happening? What is the world doing about it?

If you don't feel like reading this whole post, AT LEAST read this article. It just came out 3 days ago! This is an unbiased article in the Asian times that is a huge step for the Dalit movement.
http://www.atimes.com/atimes/South_Asia/KJ20Df02.html

It is always nice to read an article written from an unbiased attention that clearly recognizes Dalit discrimination. I think the most important part of the article are these two paragraphs...
"There's no denying that the issue of Dalits - who occupy the lowest rung of India's well-entrenched caste pyramid - is a virtual tinderbox in the country. Despite India's increasing literacy levels, mounting economic wealth and growing geopolitical heft, the benefits of national prosperity haven't quite percolated down to low-caste Indians, who are ostracized by mainstream society.

Despite over six decades of independence from British rule, Dalits are still discriminated against in all aspect of life in India despite laws specifically outlawing such acts. They are the victims of economic embargos, denied basic human rights such as access to clean drinking water, use of public facilities, education and access to places of worship."

I'm not sure if I've mentioned this or not, but a good portion of the world, especially people in India, will completely deny Dalit/caste-based discrimination. With many articles like this one out, and the UNHRC and the EU now acknowledging the issue, it seems very naive to continue to not recognize the discrimination.

Something about the look on this lady's face while she is begging for money has always gotten to me. I remember her vividly since my trip to India two summers ago.

The best way to understand why this still occurs is to say that there is a lack of enforcement, not a lack of laws. When India adopted its constitution in 1950, Untouchability was officially banned. There have been other laws passed by the Indian government and UN Social Justice Committees such as the Prevention of Atrocities Act. However, these laws are not enforced for two main reasons.
1) Religious- In the rural areas especially, Hindu roots tell people that Dalits are below the caste system and should be treated as such.
2) Economic- When talking about illegal immigration and what to do about it, people always bring up the fact that immigrants do play a big part in our economy with the jobs they usually take. On a much bigger scale, it is the same concept. Because they are considered impure from birth, Untouchables perform jobs that are traditionally considered "unclean" or exceedingly menial, and for very little pay. One million Dalits work as manual scavengers, cleaning latrines and sewers by hand and clearing away dead animals. Millions more are agricultural workers trapped in an inescapable cycle of extreme poverty, illiteracy, and oppression. And, they work for less than $1(US) per day.