To anyone who has worked around the criminal justice system in India there is nothing new to this story. In Delhi alone there are hundreds if not thousands like him who have already served more time than they would likely ever be convicted for. They just can't afford bail. Essentially, because they are poor they are trapped. While in jail they lose their jobs, they lose touch with their families, and they frequently become depressed and despondent, making them susceptible to drug and alcohol addiction. They lose, society loses, tax payers lose.
32 years ago one of the first seminal Public Interest Litigation cases was decided: Hussainara Khatoon vs. State of Bihar in which Justice Bhagwati eloquently ordered the release of thousands of under-trials in Bihar, trapped by a bail system that like today's essentially criminalizes poverty. Basically, the order said that when prisoners could show ties to the community a court should consider releasing them without them having to post bail.
I am not a criminal law expert, but from my perspective it strikes me despite all the reverence still given to the Hussainara Khatoon decision little has changed. Groups like Commonwealth Human Rights Initiative still tirelessly campaign on this issue and I know the High Courts and Supreme Court have lower courts periodically review their undertrial situations, but the problem is still entrenched.
As TOI points out in their brief editorial on this at the bottom of the article it seems that at the very least persons held should be released once they have served the maximum possible sentence they could have . Then if they don't return for the actual court date they can be held liable, and potentially convicted in their absence, but the penalty would still be time served.
Still, this doesn't address the fundamental problem, which is the poor being held far too long just because they can't afford bail. One option to think about might be to let prisoners out without bail if they have already served more time than an ordinary sentence for their alleged crime. The longer lasting solution would likely include both exploring other alternative forms of bail for the poor and providing them with better legal aid so that their cases can move through the system more quickly.
(Note: this post was revised because I had earlier said that the maximum he could have served was three months. In fact that it is instead a typical sentence for the charge - which still seems quite long even if one actually did steal 200 Rs).