Here are a couple other posts that shared other articles on the topic:

Indian Government Raids Director of Crypto Exchange WazirX, Freezes $8.1M #55043 https://www.coindesk.com/business/2022/08/05/indian-government-raids-director-of-binance-owned-crypto-exchange-wazirx-freezes-814m/ https://archive.ph/qBemw

India authorities freeze Vauld exchange’s assets worth $46.5 mln #57985 https://forkast.news/headlines/india-authorities-freeze-vauld-exchanges-assets-worth-46-5-mln/

Neither those posts nor the articles provide much additional information to help answer your question as to what's the true story on the ground.

The issue with Binance and WazirX has to do with foreigners and by the indications I've seen this means Chinese investors who were doing lending in India out of the view of the regulators.

P2P volumes in India (nor most anywhere) have not spiked, per CoinDance -- but that is only Paxful and LocalBitcoins. The trend direction shows the same on UsefulTulips.

The reason P2P trading would pick up is if there are sellers with bitcoin wanting INR and if there are buyers with INR wanting bitcoin. The nuambers are saying there is less of that today than a year ago, and even less than two years ago. Maybe those who were trading P2P are now doing it without using the P2P platforms. There are Whatsapp, Telegram and Discord groups where buyers and sellers are finding each other.

The rupee has lost value relative to the dollar, but not at a terribly high rate (just under 5% since December 2021 levels). So that catalyst for bitcoin activity has been subdued. But if the rate it is losing value increases, that would bring a lot more interest towards buying bitcoin, and with limited centralized exchange methods P2P trading could jump quite a bit.

There's definitely interest in earning "crypto". Axie Infinity "pay to play to earn" (which was ultimately just a ponzi) saw many tens of thousands of "players" in India, rising to that level in just a matter of months.

But there just aren't many opportunities for earning bitcoin online.

As far as the crackdown, these things happen and the level of activity overall dies down, but the level of activity underground increases. Over time, the underground activity grows until it starts to push back (e.g., used openly by street vendors, etc.) And when that happens, further growth becomes unstoppable.