The caste system is officially outlawed in India. With that being said, its importance varies throughout the country.  In urban areas everyone is aware of the caste system, but its impact on the people is slim.  In rural areas, while still technically illegal, it is still quite prominent. 

I believe that it has become less important since 1980.  We can see that there are even some political leaders in India (in certain states) who come from lower caste backgrounds.  However, it still seems to matter to some extent given that the dalits are still very disadvantaged compared to other Indians.